Nippon India introduces Nifty 500 Equal Weight Index Fund to diversify investment opportunities

Nippon Life India Asset Management Limited (NAM India) has announced the launch of its latest financial product, the Nippon India Nifty 500 Equal Weight Index Fund. This open-ended scheme is designed to track the Nifty 500 Equal Weight Index, offering investors a portfolio where each of the 500 constituent stocks is assigned an equal weight. This innovative approach aims to provide a more balanced investment compared to traditional market-capitalization-weighted indices.

The Nippon India Nifty 500 Equal Weight Index Fund stands out due to its focus on equal weighting, which helps mitigate the concentration risks often associated with market-capitalization-based indices. This equal weighting ensures that each stock in the portfolio has the same impact on the fund’s performance, potentially offering a more diversified exposure to the Indian market. With its launch, NAM India seeks to attract investors interested in benefiting from the overall growth of the Indian economy.

Scheduled to open for subscription on August 21, 2024, and close on September 04, 2024, the NFO period allows investors to begin with a minimum investment of Rs 1000. Subsequent investments can be made in multiples of Re 1. The performance of the fund will be benchmarked against the Nifty 500 Equal Weight Total Return Index (TRI), which includes dividends and reflects the total returns of the index.

Sundeep Sikka, Executive Director and Chief Executive Officer of Nippon India Mutual Fund, highlighted the fund’s unique attributes, noting, “Our new Nippon India Nifty 500 Equal Weight Index Fund represents a strategic shift in passive investing. Unlike traditional market-cap weighted indices, this fund employs an equal weighting approach, providing a more balanced exposure across various segments of the market.” Sikka emphasized that this strategy offers investors a chance to diversify their portfolios more effectively.

The Nippon India Nifty 500 Equal Weight Index Fund offers several key features. It provides enhanced diversification by covering 500 stocks across 21 sectors, which helps reduce concentration risk. The fund’s equal weighting minimizes risks associated with individual stock performance and manager selection, and its passive management approach ensures a low-cost investment solution that tracks the Nifty 500 Equal Weight Index.

Nippon India Mutual Fund holds a significant position in the Indian financial market, managing a wide range of passive investment products. As of July 31, 2024, Nippon India ETF boasts assets under management (AUM) of INR 1.47 trillion (approximately US$ 17.7 billion), with an 18.2% market share. The fund house commands a 59% share of ETF folios and a 61% volume share on NSE and BSE. NAM India is also a leading asset manager in India, overseeing mutual funds, managed accounts, alternative investments, and offshore funds through its Singapore subsidiary. Additionally, it operates a representative office in Dubai, catering to investors across Asia, the Middle East, the UK, the US, and Europe.