Navi Mutual Fund, part of Sachin Bansal’s BFSI group Navi, has launched its Navi Nifty 50 Index Fund, an open-ended equity scheme which would replicate the Nifty 50 Index, with the lowest cost compared to any other index schemes in the passive funds category.
The 10-day NFO has opened on 3 July 2021 and will close for subscriptions on 12 July 2021. Investors can invest through online platforms like Groww, PaytmMoney, Zerodha Coin, INDMoney and more or by contacting their nearest distributors.
The investment objective of the scheme is to achieve returns equivalent to Nifty 50 Index by investing in stocks of companies comprising Nifty 50 Index, subject to tracking error.
The 0.06% expense ratio proposed to be charged by the fund for its direct plan offering, is the lowest in the index schemes category so far. For index funds, the category average expense ratio is 0.25% and many existing index funds are charging expense in the range of 0.15% to 0.20%. Navi’s new scheme would be suitable for investors who are seeking long-term capital appreciation, investment in securities covered by Nifty 50 Index and access to the growth of market leaders.
The launch of this low-cost index fund comes at a time when many AMCs have been steeply hiking their expense ratios. Incidentally, US markets have seen a huge growth in the passive space, with passive funds contributing to nearly 40% of AUM and the largest US AMC, Vanguard focusing on providing low-cost investment options.