Reliance Index Fund - Nifty Plan NFO

Reliance Mutual Fund launches its Nifty ETF namely Reliance Index Fund - Nifty Plan. We already have Nifty Bees  & other ETFs from leading fund houses and Reliance Mutual Fund is the latest fund to join the bandwagon. As with any other Index Fund, the objective of this fund is to replicate the composition of the Nifty, with a view to generate returns that are commensurate with the performance of the Nifty.

Minimum Investment is Rs.5000 and both Growth & Dividend options are available. The entry load is nil and the scheme will be open till 23 Sep 2010. SIP facility is available with a minimum investment of Rs.500.

Why should one invest in Index Fund?

Index Funds are the simplest of the mutual fund products to understand. S&P CNX Nifty is a true representative of Indian Economy, since the constituents are blue chip companies which are the most liquid and widely owned companies. This scheme provides an opportunity to participate in India's growth story by investing in a well diversified portfolio of 50 stocks.

But investors need to understand that, like any other mutual fund, the performance of the scheme depends on the performance of the Nifty. Hence it would be better to invest through a Systematic Investment Plan (SIP) in the Growth Option.This is an open-ended fund and not exactly an ETF. Index Investing is slowly catching up with investors' attraction and it won't be a surprise if see more such funds.