Axis Mutual Fund announces the launch of a New Fund Offer (NFO) – Axis S&P BSE Sensex ETF. The open-ended exchange-traded fund tracks the S&P BSE Sensex TRI) with a subscription deadline of March 15, 2023. Ashish Naik will manage the fund with a minimum investment of Rs 5,000 and multiples of Re 1 afterwards.

The new fund will track the S&P BSE Sensex TRI benchmark and strive to generate alpha by investing in domestic equity ETFs based on the fund manager’s top-down investment view.

The fund company said that ETFs have quickly become one of the most popular investment vehicles for passive strategies because they replicate a portfolio of underlying indexes while trading in small amounts on exchanges at market-determined prices.

The investment objective of the Axis S&P BSE Sensex ETF is to provide a return, before fees, that corresponds to the total return of the S&P BSE Sensex TRI Index, subject to tracking error. However, it said there was no assurance that the scheme’s investment goals would be achieved.

To the extent possible, the plan seeks to invest in stocks that form part of the relevant index in the same proportion as each index. Basically, 95% to 100% of the investment will be in equity instruments covered by the S&P BSE Sensex TRI, and the rest will be in debt and money market investments.

Because the plan is designed to invest and maintain domestic ETF exposure greater than 95% of net assets at all times, the resulting tax treatment will be the same as for equity mutual funds. Given the mutual fund structure, investors can invest through various system options like SIP, STP and lump sum.

Some key attributes of the fund include:

Low-cost passive investing solution – A hassle-free for investors looking for low-cost equity products.

Elimination of Bias – When the fund invests in the underlying index, it removes the bias of the fund manager when buying/selling securities.

Equity Taxation – As all investments will be made in equity instruments covered by the S&P BSE Sensex TRI, the scheme is subject to shareholding tax.

Strive for minimum tracking error – A passively managed fund strives for minimum tracking error as it aims to replicate the benchmark.

Chandresh Nigam, Managing Director and Chief Executive Officer, Axis AMC, said: “With the launch of the Axis S&P BSE Sensex ETF, we aim to create a low-friction investment strategy that relies on broader market intelligence as well as our ‘quality and growth’ philosophy principles create opportunities for investors to create wealth.”