Reliance Mutual Fund (RMF), the country's largest fund house, has launched Reliance Index Fund, an open-ended index-linked scheme, which will not charge any fee from investors in the beginning.

The fund is a large-cap oriented index-linked fund with an objective to mirror performances of Nifty/Sensex. The fund will be passively managed.

Sandeep Sikka, chief executive officer (CEO), Reliance Mutual Fund, said that the decision not to charge any AMC fee from investors is an attempt to reach out to more and more new customers in smaller towns and rural areas. "We realised that people in semi-urban and rural areas neither understand mutual funds/capital markets nor invest in these instruments. By offering a simple product such as an index fund at no AMC fee, we are trying to attract these people into mutual funds and capital markets."

However, the fund will not be free from any charges forever. Sikka said they plan to sell the fund without any AMC charges for the first two-three years. "Any change in fee structure would be informed to investors three months in advance," he said.

The scheme proposes to invest 95-100 per cent in equities and equity-related securities covered by Nifty and Sensex. The scheme has both growth and dividend option. The minimum investment amount is Rs 5,000 and in multiples of Re 1 thereafter.

Entry load is nil for the scheme, as per the guidelines of the Securities and Exchange Board of India (SEBI), whereas the exit load is 1 per cent for redemption before completion of one year. The scheme offers regular dividend payouts on quarterly, half-yearly and annual dividend basis.

The fund opens for subscription on September 9 and closes on 23 September, 2010.