The Tata BSE Quality Index Fund – Direct (G) is an open-ended mutual fund scheme launched by Tata Mutual Fund. The scheme aims to provide returns that closely match the performance of the BSE Quality Total Return Index (TRI), subject to tracking error. However, there is no guarantee that the investment objective will be achieved. The New Fund Offer (NFO) is open from 17th March 2025 to 28th March 2025, with a minimum subscription of Rs. 5,000. The scheme has no entry load, but an exit load of 0.25% applies if redeemed within 15 days from allotment.

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Investment Objective and Strategy

Objective:

The investment objective of the Tata BSE Quality Index Fund – Direct (G) is to provide returns, before expenses, that commensurate with the performance of BSE Quality Total Return Index (TRI), subject to tracking error. However, there is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns.

Strategies:

Debt / Money Market Instruments includes instruments like but not limited to Commercial Paper, Certificates of Deposit, Treasury Bills, Bills
Rediscounting, Short term Corporate Bonds, Repos, Short-term Government securities and any other such short-term instruments as may be allowed under the regulations prevailing from time to time.

The Tata BSE Quality Index Fund – Direct (G) may also invest in units of liquid / money market / debt mutual fund schemes of Tata Mutual Fund or in the Scheme(s) of other mutual funds in conformity with the investment objective/ asset allocation of the Scheme.

The scheme will invest in all the stocks in the same weightage that they represent in the underlying Index. A small portion of the net assets (up to 5%) will be invested in debt and money market instruments to meet the liquidity requirements of the Scheme.

The Tata BSE Quality Index Fund – Direct (G) may take an exposure to equity derivatives instruments of constituents of the underlying index for short duration when securities of the index are unavailable, insufficient or for rebalancing at the time of change in index or in case of corporate actions, as permitted. The rebalancing in such cases will be done within the stipulated time as mentioned in ‘change in investment pattern’ para. The margin money requirement for the purposes of derivative exposure will be held in the form of Term Deposits, cash or cash equivalents or as may be allowed under the Regulations.

A part of the net assets may be invested in the triparty repo as may be permitted by RBI to meet the liquidity requirements. Securities in which investment is made for the purpose of ensuring liquidity (debt and money market instruments) are those that fall within the definition of liquid assets.

Pending deployment of funds of the Scheme in securities in terms of the investment objective of the scheme as stated above, the funds of the Scheme may be invested in short term deposits of scheduled commercial banks in accordance with provision no. 12.16 of SEBI Master Circular on Mutual Fund dated June 27, 2024.

The Scheme shall ensure that the underlying Index complies to the portfolio concentration norms as per provision no. 3.4 of SEBI Master Circular on Mutual Fund dated June 27, 2024.

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Risk Associated with Tata BSE Quality Index Fund – Direct (G)

The specific risk factors related to the Scheme include, but are not limited to the following:

The Scheme, being a passively managed will invest atleast 95% of its net assets in Equity and Equity related instruments comprising of the Underlying Index. The Index is designed to reflect the behavior and performance of the companies that forms part of basic Industries – Stock broking & Allied, Mutual Fund Scheme, Asset Management Company, Financial Products Distributor, Exchange and Data Platform, Depositories, Clearing Houses and Other Intermediaries, Ratings, Other Capital Market Related Services & any other basic industries as specified from time to time. Given that the Scheme seeks to invest in equity / equity related instruments of the Companies belonging to this sector / theme / industry and hence the concentration is likely to be high in companies belonging to the that sector / theme / industry. Owing to the high concentration risk for sectorial / thematic schemes, the risk of capital loss is highest.

There is an element of unpredictable market cycles that could run for extended periods. Loss of value due to obsolescence, or regulatory changes coupled with structural rigidity of the scheme can lead to permanent loss of capital. Further, the volatility and / or adverse performance of the said industry and/or of the scrips belonging to this industry would have a material adverse
bearing on the performance of the Scheme.

The weightage of each stock is capped at the time of rebalancing of index, which may help in limiting concentration risk. In addition, the scheme may be subject to following sector / theme / industry specific risks including but not limited to:

1. The performance of the sector / theme has a direct correlation to the performance of the economy. The sector / theme is vulnerable to adverse impacts on domestic as well as the global economy. Events such as recession, war, monsoon, political upturn, etc. may adversely affect the sector / theme.

2. Changes in Government / Reserve Bank of India policy / Regulation / Reforms etc. affecting capital market sector / theme may have a significant bearing on performance of the sector / theme.

3. Macroeconomic factors like changes in interest rate, inflation rate, etc. can have direct impact on the performance of these stocks.