Edelweiss BSE Internet Economy Index Fund – Direct (G) : NFO Details

Edelweiss Mutual Fund has submitted a draft Scheme Information Document (SID) to SEBI for the launch of a new fund offer (NFO) — the Edelweiss BSE Internet Economy Index Fund. This open-ended index scheme aims to mirror the performance of the BSE Internet Economy Index, which focuses on companies that are integral to the digital and internet-driven economy.

The scheme will be available in two plans: Regular Plan and Direct Plan. The Direct Plan is intended for investors who apply directly with the fund house without involving a distributor. Applications without a distributor code will automatically be treated under the Direct Plan.

Key Features of Edelweiss BSE Internet Economy Index Fund – Direct (G)

Investment Objective of Edelweiss BSE Internet Economy Index Fund

The investment objective of the scheme is to provide returns before expenses that closely correspond to the total returns of BSE Internet Economy Total Return Index, subject to tracking errors. There is no assurance or guarantee that the investment objective of the Scheme will be achieved.

What are the Investment Strategies of Edelweiss BSE Internet Economy Index Fund?

• Passive Investment Approach: The Edelweiss BSE Internet Economy Index Fund will adopt a passive investment strategy by replicating the composition of the BSE Internet Economy Index. It will invest in the same stocks and in the same proportion as in the index.
• Minimizing Tracking Error: The fund aims to reduce tracking error to the lowest possible level. This will be done through periodic rebalancing of the portfolio in response to changes in index constituents and weights, as well as inflows and outflows from the scheme.
• Cash and Debt Allocation: A small portion of the scheme's net assets will be kept in cash or invested in debt and money market instruments, including TREPS, to manage liquidity needs.
• Portfolio Turnover: The scheme will strive to keep portfolio turnover low to reduce transaction and brokerage costs. However, the turnover ratio may vary in order to align with the index composition and fund objectives.
• Tracking Error & Tracking Difference: The scheme may experience divergence from the index performance due to several factors such as market illiquidity, delays in transactions, reinvestment lags, and operational expenses. The tracking error is expected not to exceed 2% annually, though it can vary.
• Dealing with Market Challenges: Issues like circuit filters, stock volatility, or limited liquidity may impact the ability to perfectly mirror the index.
• Benchmarking: The fund’s performance will be measured against the BSE Internet Economy Index to evaluate its effectiveness in tracking the underlying index.

Check out other upcoming NFOs

What are the risk associated with Edelweiss BSE Internet Economy Index Fund?

• Market Risk: Equity markets are volatile and may be affected by economic cycles, financial crises, or investor sentiment, leading to price fluctuations.
• Company-Specific Risk: Operational issues, poor financial health, or unexpected events like management changes or product recalls can negatively impact stock value.
• Liquidity Risk: Stocks with low trading volumes can be difficult to buy or sell without impacting their price, especially during market stress.
• Political and Regulatory Risk: Changes in policies, regulations, or taxation, along with geopolitical instability or trade disputes, can adversely affect stock prices.
• Currency Risk: Fluctuations in exchange rates may impact the value of foreign investments.
• Behavioural Risk: Investor psychology, such as panic selling or overenthusiasm, can lead to erratic market movements.
• Sector-Specific Risk: Industries like technology or healthcare may face unique challenges, including regulatory shifts or rapid innovation.

Scheme Suitable For Which Investors?

This product is suitable for investors who are seeking:

• Long-term capital appreciation.

• Passive Investment in equity and equity related securities replicating the composition of BSE Internet Economy Total Returns Index, subject to tracking errors.