NFO Alert: Zerodha Mutual Fund launches Nifty Smallcap 100 ETF

Zerodha Mutual Fund has announced the launch of Zerodha Nifty Smallcap 100 ETF, an open-ended scheme replicating/tracking Nifty Smallcap 100 Total Return Index.

The new fund offer or NFO of the fund is open for subscription and will close on September 5. The fund will reopen for continuous sale and repurchase within five business days from the date of allotment of units under NFO.

The investment objective of the scheme is to invest in stocks comprising the Nifty Smallcap 100 Index in the same proportion as in the index to achieve returns equivalent to the Total Return Index of Nifty Smallcap 100 Index (subject to tracking error).

The Zerodha Nifty Smallcap 100 ETF provides investors with access to India’s 100 smallmarket capitalization companies, offering diversification across a wide array of sectors. While these companies present the potential for long-term capital growth, it is often accompanied by higher price volatility compared to their large-cap and mid-cap counterparts.

The fund will be benchmarked against NIFTY Smallcap 100 TRI and will be managed by Kedarnath Mirajkar.

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The minimum application amount is Rs 1,000 and in multiples of Rs 100 thereafter. The maximum Total Expense Ratio (TER) permissible under Regulation 52 (6) is up 1%.

The fund will allocate 95-100% in equities and equity-related securities covered by Nifty Smallcap 100 Index and 0-5% in debt and money market instruments, cash, and cash equivalents.

The scheme is a passively managed ETF, which endeavors to invest in stocks in proportion to the weightage of the stocks in the Nifty Smallcap 100 Index. The investment strategy would revolve around reducing the tracking error to the least possible extent through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the Index as well as the incremental collections/redemptions in the scheme.

The units of the scheme can be bought/sold on all trading days on the National Stock Exchange of India Limited or BSE Limited, where the scheme is listed. The exit load is nil.

“The Zerodha Nifty Smallcap 100 ETF offers a simple way to access the growth potential of smaller companies. With this launch, investors can choose from our suite of largecap, midcap, and smallcap ETFs, enabling them to build portfolios tailored to their individual risk appetites," said Vishal Jain, CEO, Zerodha Fund House.

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This fund is structured to complement an investor's core portfolio and offers a strategic allocation to a segment of the market known for its growth potential. Once listed, the ETF can be bought and sold on the exchange through major stockbrokers with a minimum of just one unit.

“We are committed to democratizing access to capital markets through simple and transparent products. Many of today's market leaders began as small-caps, and this ETF allows investors to participate in the journey of tomorrow's potential leaders," said Vaibhav Jalan, CBO, Zerodha Fund House.

This passive fund is suitable for investors who are seeking long-term capital and want investment in equity and equity-related securities covered by Nifty Smallcap 100. The principal invested in the fund will be at “very high” risk according to the riskometer of the fund.

The New Fund Offer (NFO) for the Zerodha Nifty Smallcap 100 ETF is now live and can be accessed through Coin by Zerodha and myCAMS, said the fund house.