Publish Date:
Kotak Mahindra Mutual Fund has launched Kotak Nifty Smallcap 250 Index Fund, it is an open-ended scheme replicating/tracking the Nifty Smallcap 250 Index.
The small-cap segment in India has emerged as a key focus area for investors seeking high-growth opportunities. Representing companies ranked beyond the top 250 by market capitalization, small-cap stocks often operate in niche markets with significant untapped potential.
In 2024, the small-cap segment delivered stellar returns, fueled by strong earnings growth, domestic demand recovery, and robust liquidity, making it an attractive investment avenue despite its inherent volatility.
[Read: 3 Best Small Cap Funds for 2025 - Top Performing Small Cap Mutual Funds in India]
Details of Kotak Nifty Smallcap 250 Index Fund:
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Investment Objective |
The investment objective of the scheme is to provide returns that, before expenses, corresponding to the total returns of the securities as represented by the underlying index, subject to tracking errors.
However, there is no assurance that the investment objective of the Scheme will be achieved |
|
Category |
Index Fund |
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SIP/STP/SWP |
Available |
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Min. Investment |
Rs 100/- and in multiples of Re 1 thereafter. Additional Purchase Rs 100/- and in multiples of Re 1 thereafter. |
Face Value |
Rs 10/- per unit |
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Plans |
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Options |
-
Growth
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Income Distribution cum capital withdrawal (IDCW)
|
|
Entry Load |
Not Applicable |
Exit Load |
NIL |
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Fund Manager |
- Mr Devender Singhal
- Mr Satish Dondapati
- Mr Abhishek Bisen (debt securities) |
Benchmark Index |
Nifty Smallcap 250 TRI |
|
Issue Opens: |
January 06, 2025 |
Issue Closes: |
January 20, 2025 |
(Source: Scheme Information Document)
What will be the investment strategy for Kotak Nifty Smallcap 250 Index Fund?
Kotak Nifty Smallcap 250 Index Fund will follow passive investment strategy with investments in stocks in the same proportion as in Nifty Smallcap 250 Index.
The investment strategy would revolve around reducing the tracking error through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the Index as well as the incremental collections/redemptions in the Scheme. Such rebalancing shall be done in accordance with timelines prescribed by SEBI from time to time.
The portfolio follows the index and therefore the level of stock concentration in the portfolio and its volatility would be the same as that of the index, subject to tracking error. Thus, there is no additional element of volatility or stock concentration on account of fund manager decisions.
About Nifty Smallcap 250 Index
Nifty Smallcap 250 Index represents the 250 companies (companies ranked 251-500) based on full market capitalisation from Nifty 500. This index intends to measure the performance of small market capitalisation companies.
Data as of January 06, 2025
(Source: NSE - Nifty Smallcap 250 Index)
The Scheme may take an exposure to equity derivatives of constituents or index derivatives of the underlying index for short duration when securities of the index are unavailable, insufficient or for rebalancing at the time of change in index or in case of corporate actions, as permitted by SEBI from time to time.
How will the scheme allocate its assets?
Under normal circumstances, Kotak Nifty Smallcap 250 Index Fund will hold an allocation of 95% to 100% in Equity and Equity related securities covered by NIFTY Smallcap 250 Index and 0% to 5% in Debt/Money Market Instruments.
Should investments in Kotak Nifty Smallcap 250 Index Fund be considered?
Kotak Nifty Smallcap 250 Index Fund offers investors a chance to diversify their portfolios by gaining exposure to the small-cap segment, a space known for its high-growth potential but also elevated risk. The fund passively tracks the Nifty Smallcap 250 Index, which represents the performance of the top 250 companies below the Nifty 500. This makes it a cost-effective choice for those looking to benefit from India's emerging businesses in diverse industries.
Small-cap indices outperformed their large-cap and mid-cap counterparts in 2024, fueled by liquidity in the market and renewed confidence among retail investors. Later in the year, valuations under this segment surged to historically high levels, raising concerns about potential overheating. Given the inherent volatility of small-cap stocks, this rally posed challenges for investors who entered at stretched valuations or lacked a long-term perspective.
Investing in small-cap funds could be rewarding, especially during bullish market cycles when small-cap stocks tend to outperform their larger peers. However, monitoring market valuations and aligning investments with financial goals and risk tolerance remains key to capitalizing on the small-cap growth story without exposing portfolios to undue risks. The fund's passive nature ensures transparency and lower costs compared to actively managed small-cap funds, which can be an advantage for cost-conscious investors.
Kotak Nifty Smallcap 250 Index Fund could be a good choice for those seeking to complement their core portfolio with high-growth potential investments. However, diversification is key, and such funds should form only a part of your portfolio, balanced with less volatile large-cap or multi-cap funds.