Sachin Bansal’s Navi Mutual Fund launches Navi Nifty 50 Index Fund with Lowest Expense Ratio

New Delhi: Navi Mutual Fund, part of Sachin Bansal’s BFSI group Navi, has announced the launch of Navi Nifty 50 Index Fund, an open-ended equity scheme which would replicate the Nifty 50 Index, with the lowest cost compared to any other index schemes in the passive funds category. The 10-day NFO will open on 3 July 2021 and close for subscriptions on 12 July 2021.

The investment objective of the scheme is to achieve returns equivalent to Nifty 50 Index by investing in stocks of companies comprising Nifty 50 Index, subject to tracking error.

The 0.06% expense ratio proposed to be charged by the fund for its direct plan offering, is the lowest in the index schemes category so far. For index funds, the category average expense ratio is 0.25% and many existing index funds are charging expense in the range of 0.15% to 0.20%. Navi’s 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.

Commenting on the new fund, Saurabh Jain, MD and CEO, Navi AMC Limited said, “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. Working with our partners and leveraging our technology background, Navi has lowered the cost to 0.06% for the direct plan offering, which is the lowest in the index schemes category, as of today. Our goal is to be able to keep providing investment opportunities to investors at the best possible cost.”

The launch of this low-cost index fund comes at a time when many AMCs have been steeply hiking their expense ratios. Incidentally, US markets have seen a huge growth in the passive space, with passive funds contributing to nearly 40% of AUM and the largest US AMC, Vanguard focusing on providing low-cost investment options.