Kotak CRISIL-IBX Financial Services 3 to 6 Months Debt Index Fund Draft Filed

Kotak Mahindra Mutual Fund has filed a draft for the Kotak CRISIL-IBX Financial Services 3 to 6 Months Debt Index Fund. This is an open-ended index fund that aims to track the CRISIL-IBX Financial Services 3 to 6 Months Debt Index. 

It falls under the category of constant maturity index funds, offering exposure to short-term debt securities with lower interest rates and credit risk​.

Objective and Strategy

The scheme’s objective is to generate returns in line with the underlying index, which consists of corporate debt securities, Commercial Papers (CPs), and Certificates of Deposit (CDs) with maturities between three to six months. 

The fund follows a passive investment approach and does not actively manage portfolio composition. Asset allocation is as follows:

• 95-100% in securities that form part of the CRISIL-IBX Financial Services 3 to 6 Months Debt Index.
• 0-5% in cash and other money market instruments​.

Benchmark 

The fund is benchmarked against the CRISIL-IBX Financial Services 3 to 6 Months Debt Index, which includes AAA-rated financial sector instruments. Tracking errors may occur, but the fund aims to maintain alignment with the index over time​.

Liquidity and Fund Structure

Since this is an open-ended fund, investors will be able to subscribe and redeem units at NAV-based prices on all business days. The Net Asset Value (NAV) will be disclosed daily on the Kotak Mutual Fund and AMFI websites​.

The scheme will be managed by Manu Sharma, who has experience in fixed-income fund management. 

Risks and Considerations

• Sectoral Risk: The fund invests in debt securities of financial institutions, which could lead to concentration risk.
• Tracking Error: Passive funds may not exactly replicate index returns.
• Liquidity Risk: Market conditions can impact the ease of buying and selling underlying securities​.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.