The fund, with a proposed total expense ratio (TER) at 0.06 per cent, will be the cheapest such fund in the market. As of now, ICICI Prudential Nifty Index Fund with 0.1 per cent TER is currently the cheapest fund in the category.
The 10-day new fund offer (NFO) for the Navi Nifty 50 Index Fund will open on July 3, 2021 and close for subscriptions on July 12, 2021.
“All funds have professional portfolio managers. With an index fund, investors don’t need to pay more for getting the expertise to hand-pick stocks. The real benefit to the investor is brought by lowering the expense ratio while still providing the same quality professional portfolio management through index funds,” said Saurabh Jain, MD and CEO, Navi AMC.
Navi said its new scheme would be suitable for investors who are seeking long-term capital appreciation, investment in securities covered by Nifty 50 Index and access to the growth of market leaders.
The launch is coming at a time when many fund houses have recently doubled or tripled their expenses on passive fund schemes. It needs to be seen if the move by Navi MF starts a price war in the category.
Though schemes by other reputed fund houses have years of track record and dedicated investors with them, investors will likely wait for Navi’s fund to perform before making a cost advantageous switch.
Bansal acquired Essel Mutual Fund from the Subhash Chandra-owned Essel Group earlier in February and renamed it. The group also includes a multi-state microfinance non-banking financial company, which has applied for a universal banking licence.
