Reliance is coming out with a new Nifty Index mutual fund that will mirror the S&P CNX Nifty. The Reliance Index Fund NFO opened on 9th September and will close on the 23rd September.
The fund will invest a minimum of 95% of its assets in the S&P CNX Nifty components and keep the remaining for expenses and redemption.
This is an index fund which means it is passive in nature and the fund manager wonâ€™t make any attempts to beat the index. They will invest in the same ratio as the components of Nifty and your returns will be quite close to Nifty returns. Any difference is due to expenses, and the cash that doesnâ€™t get invested, and is kept for redemption, expenses etc.
I normally harp about expenses a lot and the interesting thing about this fund is that they arenâ€™t going to charge any AMC fee in the beginning. This is quite an interesting thing as I donâ€™t think any other fund has ever done such a thing.Â Call it the introductory bonus.
Here is what I could find about this in the fine print:
Investment Management Fee will not be charged for the first calendar quarter, once the scheme re opens for continuous sale and repurchase (i.e. till December 31, 2010)**
Good on Reliance to do this, now just donâ€™t raise it too much after the special introductory offer.