Financial planners said that with mid cap and small cap Since stocks (the best recent performers) are likely to have a significant weight in the fund, investors would be better off making staggered purchases.
He Nifty 500 The index usually has three major subsets: Nifty 100 (large cap), Nifty Midcap 150 (mid cap) and Nifty Smallcap 250 (small cap). While the weighting of stocks in the Nifty 500 is based on market capitalizationThe Nippon India Nifty 500 Equal Weight Index fund is an equal weighted index with an allocation of 0.2% to each stock in the portfolio. As a result, the index would offer 20% exposure to large-cap stocks, 30% to mid-cap stocks and 50% to small-cap stocks.
“Valuations in the small and mid-cap spaces are expensive after the sharp rise of late and hence those looking to invest could do so using SIP” said Abhay Mathure, a Mumbai-based mutual fund distributor. “Low-risk investors might stay away.”
The NFO is currently open and closes on September 4th.
The Nifty 500 equal weight TRI (Total performance index) has outperformed the Nifty 500 TRI over five- and 10-year periods, returning 30.6% and 16.9% respectively. The Nifty 500 TRI has returned 22.3% over five years and 15.5% over 10 years. Advisors said the index could work well for those who prefer a single fund in the portfolio. This index offers exposure to 21 sectors and 500 stocks. “Investors looking to increase their holdings in small and mid-cap companies and looking for diversification across industries with reduced concentration risk can consider this fund,” said Amar Ranu, chief investment officer and insights officer at Anand Rathi Share & Stock Brokers. “Since the fund will be compulsorily buying larger portions of small and mid-cap stocks even if there is not enough float in the tail positions of the index, it would end up incurring higher transaction costs while taking positions.”
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