Axis Mutual Fund has launched an open-ended plan that will track the Nifty 50 Index total return index and allow investors to participate in the large-cap universe without having to actively manage their investments.
According to Axis Asset Management, the new fund offer (NFO) for the Axis Nifty 50 Index Fund will open for registration on November 15 and close on November 29. (AMC).
The fund’s passive strategy aims to replicate the Nifty 50 Index by investing in a portfolio of Nifty 50 Index equities in the same proportion as their weightings in the index.
Based on free-float market capitalization, the Nifty 50 Index reflects 50 firms from the Nifty 50 universe. According to the fund house, investors can profit from diversity and quality investments in large-cap blue-chip firms through a single index.
About Nifty 50 Index
The Nifty 50 is commonly used as a large-cap alternative, as it includes large blue-chip corporations. The NIFTY 50 is India’s most widely followed equity index and serves as a barometer for the country’s capital markets. The NIFTY 50 stocks account for half of all NSE trading volume.
Investors can invest in multiples of Re 1 after that, with a minimum application amount of Rs 5,000.
Because of the potential for benchmark returns, passively managed index funds have begun to gain traction among domestic investors. Index funds offer comprehensive transparency of the portfolio composition in addition to lower expense ratios and lower tracking error.
This product is appropriate for investors looking for a long-term wealth growth option. An index fund that invests in a basket of Nifty 50 Index equities in order to monitor returns and strives to attain the stated index’s returns, subject to tracking error.
|Company’s name: Weight (%)|
|Reliance Industries: 10.75|
|HDFC Bank: 9.10|
|ICICI Bank: 7.33|
|Tata Consultancy Services: 4.58|
|Kotak Mahindra Bank: 4.07|
|Larsen & Toubro: 2.73|
|Hindustan Unilever: 2.71|
Why invest in Index Funds?
Index funds provide diversity by investing in a variety of stocks in a basic and straightforward manner. Consider the Nifty 50 index. An investor can gain access to 50 different companies using this index. As a result, in the case of a bad development in any of the index’s companies, the value of one’s portfolio will not be negatively impacted. Furthermore, this variety is available for as little as Rs 100 each ticket.
In the short run, index funds’ returns may match those of actively managed funds. However, the actively managed fund tends to perform better in the long term. Long-term investors with a horizon of at least 7 years might consider investing in these funds. These funds are subject to market and volatility risks, thus they are only suitable for individuals who are willing to take a chance.