Flipkart co-founder Sachin Bansal-backed Navi Mutual Fund (MF) will be launching its US Total Stock Market Fund of Fund next week, on February 4.
The fund will give Indian investors exposure to a Vanguard fund -the Vanguard Total Stock Market Index Fund ETF (VTI). Vanguard is the second largest asset manager in the world and a pioneer in passive investing.
Being a total market ETF, VTI invests in US equities of all sizes, including mid-cap, small-cap, and micro-cap US companies. However, it has heavy allocations to US tech giants such as Apple, Microsoft and Alphabet. Its top 10 holdings account for 23.6 percent of the total assets.
As a total market index, VTI tracks the CRSP US Total Market Index which comprises more than 4,000 US stocks, that represent nearly 100 percent of the investable equity universe of the US Market.
The fund launch comes at an interesting time, when the US tech stocks, as well as the US markets are seeing correction as US Fed has signaled rate hike in March 2022 to check rising inflation in the US.
The fund intends to charge a total expense ratio of 0.06 percent to investors. The NFO will close on February 18.
Total market fund for domestic markets
Navi MF has filed for several passively-managed funds, and will be launching these funds in the coming days.
The fund house has also filed for a Total Market Index Fund for domestic markets, which will track Nifty Total Market Index.
The fund will give investors exposure across large-cap, mid-cap, small-cap and even micro-cap stocks. Micro-cap stocks are those stocks that have market cap of under Rs 5,000 crore.
As per the scheme's filing, the Nifty Total Market Index includes the Nifty 500 stocks and Nifty Microcap 250 stocks. In all, the Total Market Index will give investors exposure to 750 stocks.It must be kept in mind that several stocks in the index will be of less than one percent weight, especially those at the lower-end of market cap spectrum - the micro-cap stocks.