The Business Bytes
Mumbai, August 22, 2024 (TBB Bureau): Nippon Life India Asset Management has launched a new passive investment fund, the Nifty 500 Equal Weight Index Fund. This innovative fund evenly distributes investments across the 500 stocks that make up the Nifty 500 Equal Weight Index, allocating 0.20 percent to each stock.
The index is diversified across different market capitalizations, with 20 percent in large-cap stocks, 30 percent in mid-caps, and the remaining in small-cap stocks, providing broad exposure across 21 sectors.
The index will be rebalanced every six months, requiring the fund to adjust by selling stocks that leave the index and acquiring those that are newly added. This method helps reduce the concentration risk typically associated with traditional market-cap-weighted indices and offers a unique opportunity for investors to tap into the broader growth of the Indian market, according to Nippon India MF.
The NFO which opened on August 21, 2024, will close on September 4, 2024. The minimum investment amount required during NFO is Rs 1000 and in multiples of Re 1 thereafter.
Sundeep Sikka, Executive Director and CEO of Nippon India Mutual Fund, highlighted that the fund uses a smart-beta strategy, adopting an equal-weighting approach instead of the market-cap-based weighting seen in popular indices like the Nifty 500.
By focusing exclusively on the stocks within the Nifty 500 Equal Weight Index, the strategy minimizes non-systematic risks such as stock selection and portfolio manager bias.
As a leading player in passive funds, Nippon India MF offers 43 passive schemes, including ETFs, Index Funds, and Fund of Funds. The firm manages one of the largest ETF assets, valued at Rs 1.47 lakh crore, with an 18 percent market share as of July-end. Nippon India ETFs dominate the industry, holding 59 percent of ETF folios and 61 percent of trading volume on NSE and BSE.
