Zerodha Mutual Fund House is set to introduce a new fund named Zerodha Equity and Gold NFO. The fund house has submitted the necessary draft documents to SEBI (Securities and Exchange Board of India). This new offering will be an open-ended scheme, which means that it will continually issue new units to investors and allow them to redeem the units at any time.
Previous Fund Launches:
Before this, Zerodha Mutual Fund House had successfully launched four mutual fund schemes:
- Zerodha Nifty LargeMidcap 250 Index Fund: Focuses on a mix of large and mid-cap stocks.
- Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund: Provides tax-saving benefits under the Equity Linked Savings Scheme (ELSS) with investments in a blend of large and mid-cap stocks.
- Zerodha Nifty 1D Rate Liquid ETF: Targets very short-term investments, usually with high liquidity and low risk.
- Zerodha Gold ETF: Invests in gold, providing an option for those looking to hedge against inflation and diversify their portfolio.
These existing schemes reflect Zerodha’s emphasis on passive investment strategies, which focus on replicating market indices rather than actively selecting stocks.
Objective of Zerodha Equity and Gold NFO
The primary aim of the Zerodha Equity and Gold Mutual Fund Scheme is to balance profit and risk by diversifying across different asset classes. The fund plans to invest in:
- Equity ETFs or Index Funds: These are funds that aim to replicate the performance of specific stock indices. They offer the benefit of diversification and generally have lower costs compared to actively managed funds.
- Gold ETFs: These funds invest in physical gold or gold futures, providing a hedge against market volatility and inflation.
By combining these two types of investments, the fund seeks to generate balanced returns, benefiting from the growth potential of equities while mitigating risk with the stability of gold.
Benchmark
The performance of the Zerodha Equity and Gold NFO will be benchmarked against a composite index:
- 70% Nifty 200 (TRI): This represents the total return index of the top 200 companies listed on the National Stock Exchange, reflecting the performance of the equity component.
- 30% Domestic Price of Physical Gold: This will track the price movements of gold within the Indian market, reflecting the performance of the gold component.
Management
Kedarnath Mirajkar will manage this fund, bringing his expertise to balance the portfolio and achieve the fund’s objectives.
Investment Strategy and Allocation
The fund will follow a passive investment strategy, meaning it will aim to mirror the performance of the underlying indices rather than actively selecting stocks. The proposed allocation is as follows:
- Large Cap Equity ETFs/Index Funds: 40%
- Mid Cap Equity ETFs/Index Funds: 30%
- Gold ETFs: 30%
This allocation seeks to balance high-growth potential with stability.
Minimum Investment Amount
Investors can start investing in the Zerodha Equity and Gold Mutual Fund with a minimum of ₹5000. Subsequent investments can be made in multiples of one rupee, making it accessible for a wide range of investors.
Conclusion
The Zerodha Equity and Gold NFO is designed for investors aiming for decent returns over the long term, with a balanced approach to risk. The scheme falls under the “very high risk” category, suitable for those with a higher risk tolerance and a longer investment horizon. As with any investment, it is recommended to consult with a financial advisor to ensure it aligns with individual financial goals and risk appetite.
Read Also: Zerodha Nifty Midcap 150 ETF
FAQs
1. What is the minimum investment amount for the Zerodha Equity and Gold NFO? The minimum investment amount for the Zerodha Equity and Gold NFO is ₹5000. Subsequent investments can be made in multiples of one rupee, allowing flexibility for investors to add to their investments as they wish.
2. How is the Zerodha Equity and Gold NFO structured in terms of asset allocation? The Zerodha Equity and Gold NFO aims to balance its portfolio with a passive investment strategy. The proposed allocation is:
- 40% in Large Cap Equity ETFs/Index Funds
- 30% in Mid Cap Equity ETFs/Index Funds
- 30% in Gold ETFs This structure is designed to combine high-growth potential with stability.
3. Who is managing the Zerodha Equity and Gold NFO, and what is the benchmark for its performance? The Zerodha Equity and Gold NFO will be managed by Kedarnath Mirajkar. The performance of the fund will be benchmarked against a composite index consisting of 70% Nifty 200 (TRI) and 30% Domestic Price of Physical Gold. This benchmark reflects the mixed investment strategy of the fund, balancing equities with gold.