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Kotak Mutual Fund has launched a new fund offering (NFO) – the Kotak BSE PSU Index Fund. This index fund aims to provide investors with an opportunity to invest in public sector undertakings (PSUs) by replicating the performance of the BSE PSU Index.

Kotak BSE PSU Index Fund NFO: key details

- Fund Name: Kotak BSE PSU Index Fund

- NFO Period: July 10, 2024 to July 26, 2026

- Benchmark Index: BSE PSU Index

- Minimum Investment: ₹1,000 (lump sum)

Kotak BSE PSU Index Fund NFO: investment objective

The primary objective of the Kotak BSE PSU Index Fund is to generate returns that closely correspond to the total returns of the BSE PSU Index, subject to tracking errors. This enables investors to gain exposure to a diversified portfolio of PSUs across various sectors.

Why invest in PSU index funds?

1. Stable Revenue Stream: PSUs often have stable revenue streams due to their significant presence in critical sectors like energy, banking, and infrastructure.

2. Government Backing: PSUs benefit from government support, which can provide stability and growth opportunities.

3. Dividend Yields: Many PSUs offer attractive dividend yields, providing a source of regular income.

Kotak BSE PSU Index Fund: investment strategy

The fund will follow a passive investment strategy, aiming to replicate the composition and performance of the BSE PSU Index. This involves investing in the same stocks and in similar proportions as the index.

Kotak BSE PSU Index Fund: asset allocation

- Equity and Equity-Related Instruments of Companies in the BSE PSU Index: 95-100%

- Debt and Money Market Instruments: 0-5% (for liquidity management)

Who should invest in the Kotak BSE PSU Index Fund NFO?

The Kotak BSE PSU Index Fund NFO is suitable for:

- Investors seeking exposure to India's public sector enterprises.

- Those looking for a stable investment with the potential for regular dividend income.

- Investors with a long-term investment horizon and moderate risk tolerance.

Benefits of the Kotak BSE PSU Index Fund 

1. Targeted Exposure: Direct exposure to a diversified portfolio of PSUs, which are often market leaders in their respective sectors.

2. Professional Management: Managed by experienced professionals ensuring efficient tracking of the index.

3. Cost Efficiency: As an index fund, it generally has lower expense ratios compared to actively managed funds.

Potential risks of the Kotak BSE PSU Index Fund NFO

1. Sector Concentration Risk: Being an index fund focused on PSUs, it is exposed to risks specific to public sector enterprises.

2. Market Risk: Investments in equities are subject to market volatility and fluctuations.

3. Tracking Error: There could be slight deviations between the fund’s performance and the benchmark index.


The Kotak BSE PSU Index Fund provides a unique opportunity for investors to capitalise on the growth and stability of India's public sector undertakings. By replicating the BSE PSU Index, this mutual fund investment aims to deliver consistent returns while benefiting from the inherent strengths of PSUs. As always, investors should consider their risk tolerance and investment goals before investing.