Edelweiss Mutual Fund converts two ETFs to index funds

Edelweiss Mutual Fund has converted two of its ETFs into index funds. Edelweiss Nifty 100 Quality 30 and Edelweiss Nifty 50 will be run like index funds from October 7. The schemes will have no entry or exit load.

The AUM of Edelweiss Nifty 50 index fund was around Rs 2.6 crore and Edelweiss Nifty 100 quality 30 index fund was around Rs 11.1 crore as in September 30. The fund house said that there was no large redemption from the funds during the cooling period. The fund house has put out a notice for the investors of these schemes for the change and given a cooling period of a month.

With this change, Edelweiss Nifty 50 Index Fund's TER will change from 0.070% to 0.10 – 0.15% in direct and 0.45 – 0.50% in regular options. The fund house said that liquidity is the reason for the change in the scheme structures. Edelweiss Nifty 100 Quality 30 Fund's TER is 0.243% and now will be in the range of 0.25 – 0.30% in direct plan and 0.95 – 1.00% in regular plan.


"Considering the AUM of the Scheme and ETF units have not been traded for many days on the exchange it is considered prudent to convert the ETF into Index Fund to provide more liquidity to investors for the benefit of investors. Further, the conversion will also provide- easy liquidity and option to the investors to redeem at will, reduction in impact cost on transactions, option to retail investors to invest directly without a Demat account and reduction in brokerage costs for retail investors," the Radhika Gupta, in a letter to investors of these two schemes.

Niranjan Awasthi, Head - Product, Marketing & Digital Business, Edelweiss AMC, took to twitter to explain how index funds are different and in many cases better than ETFs. "The key difference is unlike index funds, ETFs are listed on exchange and one can invest at real time NAV. Index Funds are just like any other mutual funds when it comes to buying/selling. There is no exchange or market marker involved. You simply have to approach the AMC to invest or redeem," said Awasthi.

Here's the thread: