Kotak BSE Sensex Fund: Invest in the largest companies of India

Kotak Mutual Fund has launched a new fund offer (NFO) Kotak BSE Sensex Fund. Sensex is the oldest stock index in India and is known as the barometer of Indian equity market. It comprises of the 30 largest companies by market capitalization listed on the Bombay Stock Exchange. The NFO has opened for subscription on 27^th January and will close on 10^th February. In this article we will review this NFO.

About BSE Sensex

Sensex comprises of 30 largest and liquid companies based on their average 6-month float adjusted market capitalization and cumulative annualized traded values. Sensex represents the largest of large cap companies and covers over 40% of BSE’s total market capitalization.

Major constituents and sectors

Source: Bombay Stock Exchange, as on 31^st December 2024

Why invest in Sensex?

• The Sensex gave positive returns in 19 out of last 24 years. Average return over last 24 years was 16%.
  
  

  

  Source: Bloomberg, as on 31^st December 2024



• Rs 1 lakh invested in the Sensex would have grown to Rs 21 lakhs in the last 24 calendar years. Sensex wealth creation is a testimony to growth potential of Indian equities, making it attractive for Foreign Institutional Investors
  
  

  

  Source: Asia index, as on 31^st December 2024



• The Sensex experienced considerably smaller drawdowns during major bear markets like the 2008 Global Financial Crisis compared to the broader market, especially midcaps and small caps. Kotak BSE Sensex Index Fund can be suitable for new investors who do not have the experience of dealing with high volatility.
  
  

  

  Source: ICRA, MFI Explorer, Period of drawdown: 8^th January 2008 to 27^th October 2008



• Sensex is trading at lower premium to historical average valuations compared to midcap and small cap stocks.
  
  

  

  Source: Bloomberg, as on 31^st December 2024

Who should invest in Kotak BSE Sensex Index Fund?

• Investors looking for capital appreciation over long investment tenures


• Investors with high-risk appetites


• The fund can be suitable for first time or new investors


• Investors with minimum 5-year investment horizon


• Investors can invest in Kotak BSE Sensex Index Fund from their regular savings through Systematic Investment Plans (SIP)

Conclusion

• Kotak BSE Sensex Index Fund will track the BSE Sensex which comprises of 30 largest companies across different industry sectors providing risk diversification


• BSE Sensex has a strong long-term track record of wealth creation


• Total Expense Ratio (TER) of Kotak BSE Sensex Index Fund will be substantially lower than active large cap funds


• Investing through SIP in Kotak BSE Sensex Index Fund can be an efficient way for investors to participate in overall market growth

Investors should consult with their financial advisors or mutual fund distributors if Kotak BSE Sensex Index Fund is suitable for their investment needs.