The aim is to take advantage of the relatively better valuations of these top 10 stocks compared to broader indices like the Nifty 50 and Nifty 500.
He Nifty Top 10 Equal Weighted Index It has consistently outperformed the Nifty 50 and the Nifty 500.
It has outperformed in 9 of the last 16 years.
The top 10 stocks are currently undervalued and their weight as a percentage of total market capitalization is at an all-time low.
They have underperformed over the past four years, but historical data suggests this could change.
When the three-year historical alpha is negative, the forward alpha of the Nifty Top 10 Equal Weight Index typically turns positive.
Portfolio strength
This index offers solid portfolio quality.
It has a return on equity (RoE) 1.5 times higher than the Nifty 500 index, as of fiscal year 2024.
About 49% of the Nifty 50’s gains come from these top 10 stocks.
Anil Ghelani, CFA, Director of Passive Investments and Products at DSP Mutual FundHe explained: “Large-cap and mega-cap stocks are trading at attractive valuations. It is better to invest where there is a lower valuation and a margin of safety. The Nifty Top 10 Equal Weight Index can be part of long-term portfolios. It offers exposure to larger companies, which can reduce downturns during recessions and generate better returns over the long term.”
Should you invest?
This fund is ideal for investors seeking exposure to India’s largest and most stable companies.
The equal weighting strategy reduces concentration risk by ensuring that each stock has an equal impact on performance.
However, keep in mind your investment horizon and risk tolerance.
This fund can offer solid returns over the long term, but it is tied to the performance of the top 10 companies. Diversification remains key.
The New Fund Offering (NFO) opens on August 16, 2024 and closes on August 30, 2024.
Investors who believe in the potential of these blue-chip stocks should consider this fund as part of their long-term strategy.
Disclaimer:
The information contained in this post is for general information purposes only. We make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the post for any purpose.
We respect the intellectual property rights of content creators. If you are the owner of any material featured on our website and have concerns about its use, please contact us. We are committed to addressing any copyright issues promptly and will remove any material within 2 days of receiving a request from the rightful owner.