LIC Mutual Fund is launching an Index Fund. The fund would be open for initial offer from November 14, 2002 to 28th November, 2002. It will have three plans - Sensex, Nifty and the Sensex Advantage Plan. While the former two plans will invest 90 per cent of their assets into respective indices, the latter will invest 20 per cent of its assets in stocks outside the Sensex.
It will reopen on an ongoing basis from September 5, 2002. Entry into the fund is without any load, but an exit load of 0.75 per cent would be charged if redeemed within one year. The fund also provides for the trigger option, whereby investors can timely encash the appreciated amount.
LIC Index will be the 12th offering from the LIC fund house. It currently manages seven open-end funds (three equity and four debt) and four closed-end funds, with a total asset base of Rs 1,995.18 crore, as on October 31, 2002.
Index funds make great sense for conservative investors, who assume that trying to beat market average over the long run is futile, and their investments in these funds will at least keep up with the market.