Nippon India Nifty Midcap 150 Index Fund NFO – 15% annualized returns since inception – Should you invest?

Nippon India Nifty Midcap 150 Index Fund NFO – 15% annualized returns since inception – Should you investNippon India Nifty Midcap 150 Index Fund NFO – Review


Nippon India has launched Nifty Midcap 150 Index Fund that would open for subscription on 4th February, 2021. This fund would invest in NIFTY Midcap index which has 150 midcap companies. This index has delivered 15% annualized returns since inception in the last 15 years. Should you invest in Nippon India Nifty Midcap 150 Index Fund NFO? What are the risk factors in this mutual fund?

Also Read: 15 Best Mutual Fund SIP Portfolios to invest

Nippon India Nifty Midcap 150 Index Fund NFO Issue Details

This is an open-ended index fund replicating / tracking Nifty Midcap 150 index. Here are the NFO issue details.

Nippon India NIFTY Midcap 150 Index Fund – NFO Issue Details
Scheme Opens 04-Feb-21
Scheme Closes 12-Feb-21
Scheme reopens for continous purchase/sale 26-Feb-21
Minimum investment (Lumpsump) Rs 5,000
Minimum investment (SIP) Rs 1,000 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Nil
Risk Very High Risk
Max Total expense Ratio (TER) 1.00%
Benchmark Nifty Midcap 150 TRI

Download Nippon India Nifty Midcap 150 Index Fund SID

What is the investment objective of the Nippon India Nifty Midcap 150 Index Fund?

The investment objective of the scheme is to provide investment returns closely corresponding to the total returns of the securities as represented by the Nifty Midcap 150 Index before expenses, subject to tracking errors.

There is no assurance or guarantee that the investment objective of the scheme will be realized.

What is the allocation pattern in this index fund?

Here is how the index fund would invest:

Type of instruments Min % Max % Risk Profile
Securities constituting Nifty Midcap 150 Index 95% 100% Medium to High
Money market instruments and other debt instruments 0% 5% Low to Medium

What does Nifty Midcap 150 Index Fund contain?

NIFTY Midcap 150 represents the next 150 companies (companies ranked 101-250) based on full market capitalisation from NIFTY 500. This index intends to measure the performance of mid market capitalisation companies.

NIFTY Midcap 150 Index is computed using free float market capitalization method, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to particular base market capitalization value.

Here is the list and their weightage in this index by sector and top constituents as of now.

Nifty Midcap 150 Index - Sector wise weightages

Nifty Midcap 150 Index - Top Constituents by weightagesNifty Midcap 150 Index - Top Constituents by weightages

Why to invest in Nippon India Nifty Midcap 150 Index Fund NFO?

Here are a few reasons to invest in such index funds.

1) This fund replicates and invest in NIFTY Midcap index. If you want to tap opportunities in midcap segment, you can invest in such funds.

2) Midcap stocks have the potential to turn to large cap and blue chip companies in short to medium term. Hence, one can tap such opportunities by investing in such funds.

3) Midcap index has outperformed in the long run. If you observe, this index delivered 15% annualized returns since inception (15 years).

Some key risk factors you should consider before you invest in such funds

One should consider some of these risk factors / negative factors before investing.

1) This index fund invests in midcap stocks. Midcap stocks are high risk. They can erode your capital in the short term.

2) It invests maximum of 5% in debt instruments. There is interest rate risk and risk of downgrade of corporate credit rating.

3) Investors should not assume any guaranteed returns from such index schemes.

4) Investors should read the SID / KIM / prospectus before investing in such mutual funds.

How is the Performance of Nifty Midcap 150 Index Fund?

Now, let us look at the performance of the underlying index where this fund would going to invest. Total returns include dividends, interest and rights received by the shareholders (if any).

Nifty Midcap 150 Index Performnace since inception to 2021

Here is the performance chart of the NAV of this index since inception.

Nifty Midcap 150 Index Performnace chart since inception to 2021

Also Read: Top Performing Midcap Mutual Funds that delivered up to 50% returns

Should you invest in the Nippon India Nifty Midcap 150 Index Fund?

Nippon India Nifty Midcap 150 Index Fund invests in 150 midcap companies in India based on the weightage. This index has outperformed and delivered 15% annualized return since inception, 13% annualized returns in last 5 years and 25% returns in last 1 year. High risk investors can invest in such index funds. Moderate to low risk investors should stay away from such investments.

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Suresh KP

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