HDFC AMC to launch Nifty 50 equal-weight index fund

02 Aug , 2021 By : Kanchan Joshi

HDFC Asset Management Company Ltd will launch a Nifty 50 equal-weight index fund, a new fund offer that will aim to track the performance of constituents forming part of the parent index, where each company in the index shall be assigned equal weight at the time of review.

As per the fund house, the scheme will take exposure to all the stocks in Nifty 50 with an intent to participate in the growth story with no market-cap bias.

The NFO will open for subscription on 4 August and close on 13 August. The fund will re-open for continuous sale and repurchase within five business days from the date of allotment of units under NFO.

The minimum investment in the scheme during NFO period would be Rs5,000 and there will nil exit load to the scheme. HDFC Nifty50 Equal Weight Index Fund will be managed by Krishan Kumar Daga.

The Nifty50 index is a free-float market capitalization-weighted index, meaning companies such as Reliance Industries Ltd, HDFC Bank Ltd and Infosys Ltd hold more weightage in the index compared with Indian Oil Corporation Ltd, Coal India Ltd and Shree Cement Ltd.

However, in the case of Nifty50 Equal Weight, all the 50 constituents carry equal weight, thus reducing the risk of a stock or sectoral concentration.

The Nifty 50 Equal Weight Index has outperformed the Nifty50 Index in 13 out of 21 financial years since 2000.

The Nifty 50 Equal Weight Index is automatically rebalanced every quarter and reconstituted semi-annually in line with the benchmark index.

“Corporate profitability had sluggish growth over last couple of years. However, the corporate profitability has remarkably improved recently, and outlook looks promising going forward. After a narrow rally due to polarized market for last 2-3 years in recent past, market is in broad based phase now on the back of improving corporate profitability. In the current market dynamics, we believe that HDFC Nifty50 Equal Weight Index Fund merits due consideration," said Krishan Kumar Daga, senior fund manager, HDFC AMC.