The investment objective of the scheme is to provide returns before expenses that closely correspond to t he total return of the underlying index subject to tracking errors. However, there can be no assurance or guarantee that the investment objective of the Scheme would be achieved.
The AMC uses a `passive`` or indexing approach to try and achieve Schemes` investment objective. The corpus of the Scheme will be invested predominantly in stocks constituting the underlying index in the same proportion as in the Index and endeavour will be to track the benchmark index. A very small portion (0-5% of the Net Assets) of the Scheme may be kept liquid to meet the liquidity and expense requirements. The Scheme may also use various derivatives and hedging instruments from time to time, as would be available and permitted by SEBI, in an attempt to protect the value of the portfolio and enhance Unitholders` interest. The performance of the Scheme may not commensurate with the performance of the underlying index on any given day or over any given period. Such variations commonly referred to as the tracking error. The Scheme intends to maintain a tracking error by closely aligning the portfolio in line with the index. Th comprising the underlying index are periodically reviewed by Index Service Provider. A particular stock may be dropped or new securities may be included as a constituent of the index. In such an event, the Scheme will endeavor to reallocate its portfolio but the available investment/ disinvestment opportunities m a y n ot per mirroring of the underlying index immediately. The portfolio shall be rebalanced within 7 calendar days (or any other timeline as may be prescribed by SEBI) to adherence to the asset allocation norms of the Scheme. Similarly, in the event of a constituent stock being demerged / merged / delisted from the exchange or due to a major corporate action in a constituent stock, the fund may have to reallocate portfolio and seek to minimize the variation from the index. In such events, it may be more prudent for the fund to take exposure through derivatives of the index itself or its constituent stocks in order to minimize the long term tracking error.
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