Mirae Asset Launches BSE LargeMid Stable Dividend ETF: Passive Tracker Targets High Growth Amid Market Volatility

Mirae Asset Launches BSE LargeMid Stable Dividend ETF: Passive Tracker Targets High Growth Amid Market Volatility​

Mirae Asset Investment Managers (India) Private Limited has unveiled a new Exchange Traded Fund (ETF): the Mirae Asset BSE LargeMid (60:40) Stable Dividend 50 ETF. This open-ended scheme is designed for investors seeking returns closely aligned with the performance of the specified index, offering exposure to India’s robust large and mid-cap market segments.

The product, which operates as a passive investment vehicle, aims to track the BSE LargeMid (60:40) Stable Dividend 50 Total Return Index. The ETF provides a route for both retail and institutional investors to participate in this diversified basket of securities through stock exchanges like NSE and BSE.

Investment Objective and Asset Allocation Strategy​

The core objective of the Mirae Asset ETF is straightforward: to generate returns commensurate with the performance of the BSE LargeMid (60:40) Stable Dividend 50 Total Return Index, while minimizing tracking error. The scheme’s investment approach is highly disciplined and passive.

The asset allocation maintains a strong focus on equity. Indicatively, the scheme allocates between 95% and 100% of its total assets to securities that constitute the target index. A small allocation of up to 5% is permitted for money market instruments, including Tri Party REPO/ debt securities or units of domestic liquid schemes.

The ETF’s investment philosophy centers on replicating the index composition across both large-cap and mid-cap segments of the BSE 250 LargeMidCap Index. This balance aims to provide stability while capturing growth opportunities inherent in medium-sized companies.

Operational Mechanics for Market Participants​

The operational framework details specific rules for different types of investors. Retail investors can buy or sell units on the exchange on a continuous basis, with units generally traded in lots of 1 unit.

For Institutional and Large Investors, direct transactions are available from the fund. These participants transact directly with the AMC for amounts exceeding INR 25 crores. The ETF is created and redeemed in Creation Unit Size, which stands at 2,00,000 units. This specialized structure assists in maintaining liquidity within the secondary market of the listed units.

The scheme includes provisions for derivatives exposure, allowing up to 20% of net assets to be deployed in equity derivatives. The funds are managed by experienced team members including Ms. Ekta Gala and Mr. Vishal Singh, both with significant experience across various asset classes and indices.

Critical Risk Factors and Mitigation Strategies​

Investors must note that this product carries a Very High risk rating due to the nature of capital markets and market movements. As an equity-linked instrument, returns are subject to volatility from economic instability, changes in interest rates, or diplomatic developments. There is no guarantee that the investment objective will be achieved.

The ETF’s passive nature, however, mitigates specific risks associated with active fund management decisions. The portfolio follows the index without attempting individual stock selection or defensive moves in declining markets. The AMC monitors tracking error continuously to keep it low, although such error may occasionally exceed 2% p.a. during periods of market volatility or corporate actions within the underlying index.

New Fund Offer (NFO) Details and Costs​

The ETF is being offered through a New Fund Offer (NFO). During this period, the offer for sale of units is priced at 1/100th value of the BSE LargeMid (60:40) Stable Dividend 50 Index as on the date of allotment.

Post-NFO, the scheme offers continuous subscriptions and redemptions based on the exchange listing or direct transactions with the AMC. The estimated maximum Base Expense Ratio (BER) charged to the scheme is up to 0.90% annually. This BER encompasses expenses related to investment management, advisory fees, custodian charges, and marketing costs.

Redemption and Liquidity Mechanisms​

The ETF's design incorporates mechanisms to ensure liquidity. In instances of market stress or illiquidity—such as a continuous discount of more than 1% of the ETF units against the day-end NAV for 7 trading days—investors other than Market Makers can redeem units directly with the fund.

For NRIs/FIIs/FPIs, redemption proceeds are remitted according to relevant RBI guidelines, and the Fund is not liable for losses arising from exchange fluctuations during currency conversion. The AMC has appointed ten Market Makers (MMs) to ensure continuous liquidity in both Creation Unit Size transactions and general market trading.