SBI Mutual Fund, the country’s largest fund house, has launched a new open-ended scheme called the SBI Nifty IT Index Fund. This fund aims to track the performance of the Nifty IT Index.
The New Fund Offer (NFO) is available from 4 February to 17 February 2025, making it an excellent opportunity for those interested in investing in the IT sector.
Key Features
Investment Objective
The fund seeks to match the overall returns of the stocks in the Nifty IT Index. However, it is important to note that tracking errors can occur, and returns cannot be guaranteed.
Investment Allocation
The scheme invests between 95% to 100% of its funds in stocks included in the Nifty IT Index.
The remaining 5% is invested in other instruments such as Government Securities (G-Secs), State Development Loans (SDLs), Treasury Bills, tri-party repos, and liquid mutual fund units.
Benchmark
The performance of this fund is compared with the Nifty IT TRI Index. The trustees reserve the right to change the benchmark if market conditions require a better comparison.
Investment Details and Strategy
Entry, Exit, and Investment Modes
Minimum Investment
1) During the NFO: ₹5,000, with further investments in multiples of ₹1.
2) For switching from another SBI Mutual Fund (after the lock-in period): Minimum remains at ₹5,000.
3) For continuous investments: ₹5,000 is the minimum, followed by multiples of ₹1.
Systematic Investment Plan (SIP)
Investors can choose from Daily, Weekly, Monthly, Quarterly, Semi-Annual, and Annual SIP options.
Exit Load
If you exit the scheme within 15 days of allotment, a 0.25% exit load will be charged. No exit load is applied after 15 days. (Note: The AMC can change this exit load structure in the future.)
Investment Strategy
Passive/Indexing Approach
The scheme follows a passive investment strategy by replicating the Nifty IT Index rather than trying to outperform it.
It does not make stock selections based on economic, financial, or market analysis, which helps avoid the risks of active management.
Portfolio Adjustments
Although the main focus is on stocks in the Nifty IT Index, up to 5% of the portfolio can be invested in stocks not in the index during events like corporate actions (e.g., mergers or reconstitutions).
The portfolio will be rebalanced within 7 days if there are any changes in the index composition.
Derivative Exposure
The scheme may use derivatives for non-hedging purposes as allowed by regulations. While derivatives can offer high profits, they also come with higher risks and the potential for significant losses.
Fund Manager
The scheme is managed by Harsh Sethi, a veteran at SBI Mutual Fund since May 2007. He also manages several large passive funds, including the SBI Nifty IT ETF, SBI Nifty Consumption ETF, and SBI Nifty Private Bank ETF.
