Nippon India Launches Flexicap Fund of Fund (FoF) – NFO Review
Nippon India is planning to launch Flexicap Fund of Fund NFO that would open for subscription on 10th December, 2020. This Flexicap fund of fund would majorly invest in units of ETFs and Index Funds of Nippon India mutual funds. While this fund is categorized as flexicap category, it allocates a higher portion of equity of a minimum of 95% which makes such fund as HIGH RISK. Should you invest in Nippon India Flexicap Fund NFO?
What are Flexicap Mutual Funds?
Flexicap mutual funds is the new category of funds added by SEBI recently. Flexicap mutual funds would invest a minimum of 65% in equity and balance in debt instruments. However the allocation would also depend on investment objective of the fund.
Nippon India Flexicap Fund NFO Issue Details
This is an open-ended mutual fund scheme. Here the NFO issue details.
|Nippon India Passive Flexicap Fund – NFO Issue Details|
|Scheme reopens for continous purchase/sale||08-Jan-21|
|Minimum investment (Lumpsump)||Rs 5,000|
|Minimum investment (SIP)||Rs 500 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Risk||Moderately High Risk|
|Max Total expense Ratio (TER)||1.00%|
|Benchmark||Nifty 500 TRI|
|Fund Manager||Mr Mehul Dama|
Who can invest in this mutual fund scheme?
Any of the following can invest in this scheme.
1) Resident Individuals
2) Resident Indian Nationals, including partnership forms, companies, Banks, HUFs, Sole Proprietorship etc.,
4) Foreign Portfolio Investors
What is the investment objective of Nippon India Flexicap Fund NFO?
The investment objective of the Scheme is to seek to long term capital growth by investing in units of ETFs/Index Funds of Nippon India Mutual Fund. However, there can be no assurance or guarantee that the investment objective of the Scheme will be achieved.
However, there is no assurance or guarantee that the investment objective of the Scheme will be realized.
What is the allocation pattern in this mutual fund scheme?
This fund investment pattern is as follows:
|Type of instruments||Min %||Max %||Risk Profile|
|Units of Nippon India ETFs/Index Funds of Nippon India Mutual Fund||95%||100%||Medium to High|
|Debt & Money Market Instruments||0%||5%||Low to Medium|
Why should you invest in such Flexicap Funds?
Here are a few reasons to invest in such schemes.
1) This Flexicap fund is a fund of fund that would invest in units of ETFs and index funds. Instead of a single fund, it would invest in multiple funds that can provide portfolio diversification.
2) One would know how underlying group of funds / ETFs performed. Investors can always take call whether to invest in such fund of funds or not.
Some risk factors you should consider before investing in such funds
One should consider some of these risk factors / negative factors before investing.
1) This flexicap fund would invest a minimum of 95% in equity related instruments, hence high risk.
2) This fund would invest in other ETFs and index funds and there is no role of the fund manager in picking up right stocks.
3) This fund would invest in existing ETFs and Index Funds. There is already fund management fees charged for such ETFs/Index Funds. On top of this, there are fund management fees of 1% that is being charged to this fund which is very high. Investors end up paying double charges to manage the fund.
4) This fund invests up to 5% in debt instruments. This segment has turned to be high risk due to defaults from corporates.
5) You can go through all risk factors indicated in the scheme related documents before investing.
How is the Performance of existing Flexicap Funds?
Currently there are no existing flexicap funds to compare.
How is the performance of existing Nippon India ETFs and Index Funds?
Here are the list of existing ETFs / Index funds of Nippon India where it would invest and their annualised returns.
|Fund Name||1 Year||3 Year||5 Year|
|Nippon India ETF NV20||18.65%||13.48%||14.10%|
|Nippon India ETF Gold BeES||28.35%||17.92%||13.33%|
|Nippon India ETF Sensex||10.84%||11.94%||12.80%|
|Nippon India ETF Shariah BeES||29.87%||9.90%||12.47%|
|Nippon India ETF Nifty BeES||10.33%||10.30%||11.98%|
|Nippon India Index Fund – Sensex Plan||10.43%||11.05%||11.65%|
|Nippon India ETF Bank BeES||-8.26%||4.98%||11.40%|
|Nippon India ETF Nifty 100||9.31%||8.10%||10.90%|
|Nippon India Index Fund – Nifty Plan||8.91%||9.06%||10.75%|
|Nippon India ETF Consumption||12.63%||6.14%||10.56%|
|Nippon India ETF Junior BeES||11.23%||2.92%||10.53%|
|Nippon India ETF Dividend Opportunities||11.42%||5.47%||10.40%|
|Nippon India ETF Hang Seng BeES||7.71%||4.33%||8.13%|
|Nippon India ETF Infra BeES||7.80%||1.18%||5.79%|
|Nippon India ETF Liquid BeES||2.29%||4.01%||4.57%|
|CPSE Exchange Traded Fund||-14.68%||-12.02%||-1.46%|
|Nippon India ETF PSU Bank BeES||-35.23%||-24.05%||-11.86%|
|Nippon India ETF Long Term Gilt||10.26%||9.19%||NA|
|Nippon India ETF Nifty Midcap 150||22.88%||NA||NA|
|Nippon India ETF Sensex Next 50||12.33%||NA||NA|
Should you invest in the Nippon India Flexicap Fund NFO?
Nippon India Passive Flexicap Fund would invest in ETFs and Index funds of Nippon India mutual funds itself. There is no role of the fund manager in picking up stocks. Nippon India ETFs and Index funds gave mixed performance ranging between 12% negative annualized returns to 14% annualized returns in the last 5 years. It is difficult at this point of time to guess how such funds would perform. On top of this one need to pay high fund management fees. Investors can give a miss to such NFOs.
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