The new fund offer or NFO of the scheme is open for subscription and will close on September 4.
The investment objective of the scheme is to provide investment returns that commensurate to the total returns of the securities as represented by the Nifty 500 Equal Weight Index before expenses, subject to tracking errors.
The scheme will allocate 95-100% in securities constituting Nifty 500 Equal Weight Index and 0-5% in cash and cash equivalents and money market instruments and/or schemes which invest in the money market securities or liquid schemes.
The performance of the scheme shall be benchmarked against Nifty 500 Equal Weight TRI. The scheme will be managed by Himanshu Mange. The exit load is nil.
The minimum investment amount required during NFO is Rs 1000 and in multiples of Re 1 thereafter. The fund is a differentiated offering that seeks to provide investors with exposure to a diversified basket of 500 companies, with each stock having equal weight in the portfolio. This approach tends to mitigate concentration risk typically associated with market-capitalization-weighted indices and provides a unique opportunity to participate in the broader Indian market’s growth.According to the fund house, investors looking to take advantage of India’s growth story should have exposure to a wider market including large, mid- and small-cap companies which may drive the growth in the long run.
Nifty 500 Equal Weight Index is well-diversified, with investments in 500 stocks spread across 21 sectors. The index would provide exposure to 20% in large cap stocks, 30% in mid caps and 50% in small cap stocks, a combination which is rare to find in other existing funds in the market.
“Building upon our strong track record in passive investments, we are excited to launch the ‘Nippon India Nifty 500 Equal Weight Index Fund’ a Smart-Beta strategy, which would adopt equal weighing approach in contrast to popular indices like Nifty 500, which use Market-cap weighting approach,” said Sundeep Sikka, ED and CEO, Nippon India Mutual Fund.
The scheme is suitable for investors who are seeking long term capital growth and want investments in equity and equity related securities and portfolio replicating the composition of the Nifty 500 Equal Weight Index, subject to tracking errors.