Thursday, May 8, 2008

Kotak Launches Sensex ETF

Kotak Mutual is launching Kotak Sensex ETF on May 7, 2008. This exchange traded fund will track BSE Sensitive Index (Sensex) to provide returns before expenses that closely correspond to the total returns of the BSE Sensex. The fund is open for subscription from May 07, 2008 till May 16, 2008. The units would be listed on BSE to provide liquidity through secondary market.

This will be the second ETF on Sensex. The first ETF on Sensex was launched in January 2003 -- ICICI Pru Spice which has closely tracked Sensex and delivered returns as much as the Sensex in the past 5-years but currently has less than Rs 1 crore assets under management.

ETF is an Index fund but they trade on the market like stocks. Kotak Sensex ETF will facilitate exposure to Sensex with a single order. It will also enable trading flexibility by Intra day buying and selling just like any other listed share. The pricing will also be almost live as the intraday indicative price is likely to be closely linked to Sensex.

Index funds have lower cost as they charge lower management fee compared to actively managed funds. Investors will have to pay brokerage in buying and selling these instead of any entry/exit load.

Other Details:

Each unit of the Kotak Sensex ETF will be approximately equal to 1/100th of the value of BSE SENSEX

Entry Load during NFO: For investments < investments =" "> Rs 1 Crore Nil

No entry load shall be charged on “all direct” applications received by AMC i.e., on application forms that are not routed through any distributor / agent / broker and submitted to AMC office or collection centre / investment service centre.

Entry Load during continuous offer : Nil

Exit Load Nil

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