Kotak Mutual Fund has launched the Kotak Nifty Commodities Index Fund, which is an open-ended scheme that replicates/tracks the Nifty Commodity Index.
The scheme's New Fund Offer (NFO) is currently open for public subscription and will close on March 3. The scheme will reopen for continuous sale and repurchase on March 18.
The scheme's investment objective is to generate returns that, before expenses, correspond to the total returns of the securities represented by the underlying index, subject to tracking errors.
Devender Singhal, Satish Dondapati, and Abhishek Bisen will manage the scheme, which will be benchmarked against the Nifty Commodities Index (Total Return Index, or TRI).
Investors can invest a minimum of Rs 100, with additional investments of any size thereafter. The scheme will invest 95-100% in equity and equity-related securities tracked by the Nifty Commodities Index, with 0-5 percent in debt/money market instruments.
This index includes some of India's most established companies in critical sectors like oil, metals, mining, cement, power, and chemicals, which are the foundation of industrial and economic growth. According to a press release from the fund house, investing in this index provides an efficient entry point into India's long-term growth story while capitalizing on global supply-demand shifts that drive commodity cycles and price trends.
"At Kotak Mutual Fund, we are committed to providing a diverse range of investment solutions to meet the needs of our investors. The launch of the Kotak Nifty Commodities Index Fund demonstrates our commitment to offering both active and passive products to suit different risk appetites and investment horizons. Commodities play an important role in economic cycles and industrial expansion," stated Nilesh Shah, Managing Director of Kotak Mutual Fund.
"With India's strong infrastructure push and rising demand for key resources, the Kotak Nifty Commodities Index Fund offers investors a structured way to gain exposure to this growing segment. The fund is designed for those looking to diversify their portfolio with commodity-driven equities at a relatively low cost," he continued.
To achieve its investment goal, the scheme will employ a passive investment strategy, investing in stocks in proportion to the Nifty Commodities Index. The investment strategy will be based on reducing tracking error through regular portfolio rebalancing, taking into account changes in stock weights in the Index as well as incremental collections/redemptions within the scheme.
"Commodity-linked businesses contribute significantly to economic growth. This index fund offers broad exposure to multiple commodity sectors, capitalizing on long-term trends in industrial growth, infrastructure spending, and global supply-demand shifts. "While large-cap stocks anchor the index with established industry leaders, mid-cap players add growth potential," said Devender Singhal, Executive Vice President and Fund Manager at Kotak Mutual Fund.
The scheme is appropriate for investors seeking long-term capital growth and returns that are comparable to the performance of the Nifty Commodities Index, subject to tracking error.
