DSP Nifty Top 10 Equal Weighted Index Fund and DSP Nifty Top 10 Equal Weighting ETF will attempt to capitalise on the relatively better valuations of the top 10 stocks compared to Nifty 50 and Nifty 500 based on metrics such as price-earnings ratio, return on equity and return on assets ratios.
The new fund offer or NFO of DSP Nifty Top 10 Equal Weight Index Fund and DSP Nifty Top 10 Equal Weight ETF will open for subscription on August 16 and close on August 30.
“While we have seen an increasing level of interest in small and mid-cap stocks, large and mega-cap stocks appear to be trading at relatively more attractive valuations. Sound investment principles suggest that it is always better to invest where there is a relatively lower valuation and margin of safety. Therefore, we are considering an index that will hold the ten largest stocks, in an equal-weighted strategy,” said Anil Ghelani, CFA, Head of Investments and Passive Products, DSP Mutual Fund.
He further added, “The Nifty Top 10 Equal Weight Index can be a part of long-term portfolios as it provides exposure to larger companies, which can help reduce drawdowns during downturns and can also generate better returns in the long run,” he said.
The schemes will be benchmarked against the Nifty Top 10 Equal Weight TRI Index. The minimum investment amount is Rs 100 and any amount thereafter for DSP Nifty Top 10 Equal Weight Index Fund. The minimum investment amount for DSP Nifty Top 10 Equal Weight ETF is Rs 5,000 or any amount thereafter. The schemes will be managed by Anil Ghelani and Diipesh Shah. The expense ratio for DSP Nifty Top 10 Equal Weight Index Fund is up to 1% for the regular plan and up to 0.25% for the direct plan. For DSP Nifty Top 10 Equal Weight ETF, the expense ratio is up to 0.2%. The scheme will be suitable for investors seeking long-term capital growth and want to invest in equity and equity-related securities covered by the Nifty Top 10 Equal Weight Index, subject to tracking error.
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