SBI Mutual Fund eyes Rs 500 crore from new fund

The largest fund house SBI Mutual Fund launched a new equal weight index fund that will track the Nifty 50 index, and expects to garner at least Rs 500 crore during the primary subscription period. For investors, the open-ended fund comes with a relatively lower cost as it is a passive fund which will remain open from January 16 to 29, the fund house said.

“We are targeting to collect at least Rs 500 crore during the primary subscription period,” DP Singh, the deputy managing director & joint chief executive at SBI Funds Management, told PTI.

The investment objective of the scheme is to provide returns that correspond to the total returns of the securities represented in the underlying Nifty index, he said.

Shamsher Singh, the managing director & chief executive, said, the new index fund is a smart-beta strategy that allocates equal weight to all stocks, instead of considering market cap as the sole criteria.

Investors who seek balanced diversification and a broad-based growth potential from all companies based on Nifty50, passively and at a relatively lower cost can consider investing in this fund, he said.

DP Singh said in market-cap weighted indices like Nifty50, a stock/sector might constitute a large weight of the index which sometimes leads the index to be driven by them.

“Our new fund is an opportunity for those who want to take advantage of the merits of passive investing while aiming to benefit from diversification and growth across the largest companies in India by market cap and sectors, which steer our economy,” DP Singh said.