NFO Review: ICICI Prudential Nifty50 Equal Weight Index Fund


ICICI Prudential Mutual Fund has launched ICICI Prudential Nifty50 Equal Weight Index Fund which will invest in constituents of Nifty50 Equal Weight Index. The fund will be managed by Kayzad Eghlim and Nishit Patel, The NFO will close for subscription on September 28.

This is not the first scheme to replicate the Nifty 50 Equal Weight Index. Currently, there are three other similar schemes that track the same index: DSP Nifty50 Equal Weight Index fund, ABSL Nifty50 Equal Weight Index Fund and HDFC Nifty50 Equal Weight Index Fund. Among them, DSP Nifty50 Equal Weight Index Fund is the oldest scheme with 20.52% returns in three years.

What’s the USP?
An equal weight index has empirically higher dividend yield, a more diversified portfolio and can offer relatively better returns over a longer period of time.

Nifty50 Equal Weight Index represents an alternative weighting strategy which is relative to market capitalization weighted- Nifty 50 Index. The weightage of constituents in the index are aligned equally at every rebalancing/ reconstituting date. Index is re-balanced on a quarterly basis and reconstituted on a semi-annual basis.

Who should invest?
Nifty 50 equal weight index concentrates on sectors like financial services, automobile and automotive components, FMCG, healthcare and IT. According to the fund house, an investor who wants to earn higher returns and meet long term financial goals should consider investing in this scheme.

“Since indices perform differently under variable market conditions, it is prudent to diversify across indices with different weightage methodology. Nifty50 Equal Weight Index is less concentrated in the top 5 sectors as compared to the Nifty 50 Index, thus providing an excellent diversification opportunity. Also, there is no size bias as the index tries to reduce the impact of bigger companies on the index performance,” says Chintan Haria, Head- Product Development & Strategy, ICICI Prudential AMC.

Our take
We have always advised investors to not invest in new fund offers until they are offering something unique or something that is not available in the market. As said earlier, there already are three schemes tracking the Nifty Equal Weight Index.

Expert speak
“Long term or equity investors who want to take lesser risks should go for the equal weight index fund. It will give them decent returns over a period of time. All companies in the equal weight index are assigned equal weightage as compared to Nifty50. The equal weight reduces the risk which makes them a good pick for the conservative investors,” says Palaniappan Chokkalingam, Director, Prakala Wealth Management Ltd.

Fund at a glance

Scheme name ICICI Prudential Nifty50 Equal Weight Index Fund
Benchmark Nifty50 Equal Weight TRI
Fund Manager Kayzad Eghlim and Nishit Patel
NFO Open 14th September, 2022
NFO Close 28th september, 2022
Minimum Investment (NFO) Rs. 5,000/- (plus in multiple of Re.1)

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