Zerodha Fund House (ZFH) has filed a draft Scheme Information Document (SID) for ‘Zerodha Nifty LargeMidcap 250 Index Fund’ with the Securities and Exchange Board of India (SEBI). Following the approval of the market regulator, the scheme will become available for investments by retail investors. Here is a look at the key features of this scheme, as per the draft SID.

One of the most significant features of Zerodha Nifty LargeMidcap 250 Index Fund is that will offer only direct plans to investors. Moreover, the direct plan of this scheme will offer only the ‘Growth Option’.

Who may invest?

Zerodha Nifty LargeMidcap 250 Index Fund is an open-ended scheme replicating/tracking the Nifty LargeMidcap 250 Index. This index fund may be suitable for investors who are seeking long-term capital growth through investment in equity and equity-related securities covered by the Nifty LargeMidcap 250 index. The draft scheme’s riskometer, however, shows that the investors’ principal will be at a “Very High Risk”.

Investment Objective

The scheme will invest in stocks comprising the Nifty LargeMidcap 250 Index in the same proportion as in the index to achieve returns equivalent to the Total Return Index of the Nifty LargeMidcap 250 Index (subject to tracking error). However, there can be no assurance or guarantee that the investment objective of the scheme will be achieved.

Also Read: Zerodha Tax Saver (ELSS) Nifty LargeMidcap 250 Index Fund: Tax Benefit, Draft SID Details Here

Nifty Large Midcap 250 Index Performance

As per data on the NSE website, the Nifty Large Midcap 250 Index has given 14.22 annualised price return and 15.73% annualised total return since inception. In the last 5 years, the index has given 12.92% annualised price returns and 14.07 total returns. The index was launched on November 30, 2017.

The index reflects the performance of a portfolio of 100 large-cap and 150 mid-cap companies listed on the NSE, represented through the Nifty 100 and Nifty Midcap 150 index respectively. “The aggregate weight of large-cap stocks and mid-cap stocks is 50% each and are reset on a quarterly basis,” says the NSE website.

The top constituents of the Nifty Large Midcap 250 Index and their weightage as of August 31, 2023, are following

Investment strategies

The draft SID of the scheme says this passively managed index fund will endeavour to invest in stocks in proportion to the weightage of the stocks in the Nifty Large Midcap 250 Index. “The investment strategy would revolve around reducing the tracking error to the least possible extent 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,” SID says.

A part of the funds may also be invested in debt and money market instruments to meet the liquidity requirements. The scheme may also invest in schemes of mutual funds in terms of the prevailing regulations.

Also Read: I am 30 years old and unmarried, earning Rs 50,000 per month. Which mutual fund should I invest in?

Fund Manager

The scheme will be managed by Kedarnath Mirajkar, who has previously been a fund manager at Aditya Birla Sun Life AMC.

SIP options

The scheme will provide daily, weekly, fortnightly, monthly, quarterly, half-yearly and yearly SIP options starting with a minimum amount of Rs 100. The scheme will also provide a SIP top-up facility where investors will have the option to increase the SIP amount by a fixed amount at predetermined intervals.

Liquidity

The SID says that on an ongoing basis, the subscription and redemption shall be at NAV-based prices on all Business Days. The Fund shall despatch proceeds of redemption within three working days of receiving the valid redemption request.

Face value

The face value of each unit of Zerodha Nifty LargeMidcap 250 Index Fund will be Rs 10 and the scheme will track Nifty Large Midcap 250 Index TRI.

Also Read: Zerodha MF files draft documents with Sebi to launch two schemes

Minimum Investment amount

The minimum purchase price of the units of this index fund will be Rs 100 and thereafter in multiples of Re 1. Additional purchases can be done with Rs 100 and thereafter in Re 1 multiples.

Transaction Charges

No transaction charges will be levied or deducted as the scheme is offering only a Direct Plan.

Disclaimer: The above content is for informational purposes only. Mutual Fund investments are subject to market risks. Please consult your financial advisor before investing.