In the ever-evolving landscape of the Indian stock market, investors are constantly seeking innovative strategies that balance risk and reward while offering broad market exposure.
To cater to these needs, Nippon India Mutual Funds has introduced a unique index fund, the “Nippon India Nifty 500 Equal Weight Index Fund”. It is launched as a New Fund Offer (NFO) on 21st August 2024 and is open for subscription until 4th September 2024. This fund equally represents the entire NIFTY 500 universe, where each stock contributes equally.
Sounds intriguing, doesn’t it? Let’s dive into the blog to explore more about this impressive fund and discover what it offers to its investors.
Details of Nippon India Nifty 500 Equal Weight Index Fund
Nippon India Nifty 500 Equal Weight Index Fund is an Open-ended Index Fund that aims to mimic its benchmark index.
This is the India’s first scheme that is based on Nifty 500 equal weight index. This fund gives every stock, either big or small, an equal chance to be part of the fund’s portfolio. This approach helps to capture the performance of a balanced mix of companies, rather than letting just a few heavy weights steer the results.
Investment Objective
The objective of the scheme is to provide returns that commensurate with the total returns of the securities as represented by the Nifty 500 Equal Weight Index before expenses, subject to tracking errors.
Let’s have a quick look at the key basic details of the fund:
What is NIFTY 500 Equal Weight Index?
The Traditional Nifty 500 invests in the companies based on their market capitalization. The top 100 stocks account for nearly 74% of the overall market capitalization of the index, giving them a significant influence on the index’s performance.
However, the Nifty 500 Equal Weight Index takes a different approach by giving equal importance to all 500 companies in its parent index, the Nifty 500, regardless of the size of the company. This ensures that each stock contributes equally to the overall performance of the index.
This strategy offers a unique advantage for investors in terms of diversification and risk management. It also reduces the concentration risk typically associated with the large cap dominated indices.
About Nippon India AMC
Nippon India Mutual Fund is a joint venture between India’s Reliance Capital and Japan’s Nippon Life Insurance Company. It is incorporated on February 24, 1995, and holds an AUM of Rs. 5.49 lakh crores as of July 30, 2024.
As one of India’s leading asset management companies, Nippon India Mutual Fund offers a diverse range of products to meet various investor needs. It has a presence in almost 263 locations across the country. The company continuously strives to launch innovative products and customer service initiatives to enhance value for its investors.
Meet the Fund Manager – Himanshu Mange
The fund is managed by a seasoned professional who is currently overseeing approximately ₹148,174.97 crores in assets under management across various schemes. He holds a B. Com degree and is a Chartered Accountant.
Prior to joining Nippon India Mutual Funds, he has worked with Tata AIA Life Insurance, Pipalia Singhal & Associates, Felix Solutions, Lodha Group and N.B. Gandhi & Co.
Navigating the Risks and Returns
The comparison between the returns of the traditional NIFTY 500 and the innovative Equal Weight Index is as follows:
Note: Returns as on 19 August 2024
The above table shows that the Equal weight Nifty 500 index has performed better than the traditional Nifty 500 index.
As an index fund, the Nippon India Nifty 500 Equal Weight Index Fund is expected to produce returns like its benchmark. However, these returns may vary depending on market conditions.
Let’s have a look at the top holdings of the Benchmark index:
Note: The holdings mentioned above are as of July 31, 2024.
Suggested read: HDFC Nifty500 Multicap 50:25:25 Index Fund
Who should invest in the Nippon India Nifty 500 fund?
The Nippon India Nifty 500 Equal Weight Index Fund offers a fantastic opportunity for investors looking to gain diversified exposure across the entire market spectrum, from large-cap giants to emerging small-cap stocks.
It is best suited for investors with high-risk appetite and with a goal of long-term wealth creation.
It is always advisable to conduct thorough research on the fund or consult a financial advisor before investing.
