Nippon Life India Asset Management Limited (NAM India), the asset manager of Nippon India Mutual Fund (NIMF), has announced the launch of the Nippon India Nifty 500 Equal Weight Index Fund.

This open-ended scheme will replicate and track the Nifty 500 Equal Weight Index, offering investors an opportunity to gain exposure to a diversified basket of 500 companies with equal weight in the portfolio.

The fund aims to mitigate the concentration risk typically associated with market-capitalization-weighted indices.

By giving each stock an equal weight, it provides a balanced exposure to the broader Indian market.

The Nifty 500 Equal Weight Index includes 500 stocks spread across 21 sectors, with an investment distribution of 20% in large-cap stocks, 30% in mid-cap stocks, and 50% in small-cap stocks.

This diverse mix offers a rare combination not commonly found in other market funds.

The New Fund Offer (NFO) will close on September 4, 2024.

Investors can participate with a minimum investment of ₹1,000, with additional investments allowed in multiples of ₹1.

The scheme’s performance will be benchmarked against the Nifty 500 Equal Weight TRI.

Sundeep Sikka, Executive Director and CEO of Nippon India Mutual Fund, said “Nippon India Nifty 500 Equal Weight Index Fund, a Smart-Beta strategy, adopts an equal-weighting approach, unlike popular indices like Nifty 500, which use a market-cap weighting approach.”

Key features of the fund include:

Diversification: The fund provides exposure to the top 500 stocks across 21 sectors, helping to reduce concentration risk.

Reduced risk: By eliminating non-systematic risks such as stock picking and portfolio manager selection, the fund offers a safer investment option.

Equal weighting: The fund offers exposure to large-cap, mid-cap, and small-cap stocks, creating a balanced portfolio.

Passive management: As a low-cost investment solution, the fund tracks the Nifty 500 Equal Weight Index.

Nippon India Mutual Fund is a major player in the passive investment space, offering 43 passive schemes, including ETFs, index funds, and fund-of-funds.

As of July 31, 2024, Nippon India ETF is one of the largest ETF players, with an AUM of ₹1.47 trillion (US$17.7 billion) and a market share of 18.2%.

Nippon India ETF also commands 59% of ETF folios in the industry and holds 61% volume share on NSE and BSE.

Investors should note that the fund is subject to tracking errors, and there is no assurance that the investment objective of the scheme will be achieved.

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