Aditya Birla Sun Life Nifty Midcap 150 Index Fund NFO – Should you invest?
Aditya Birla Sun Life has launched Nifty Midcap 150 Index Fund that would open for subscription on 15th March, 2021. This fund would invest in a NIFTY Midcap index, which has 150 midcap companies. This index has delivered 20% annualized returns in the last 15 years. Should you invest in Aditya Birla Sun Life Nifty Midcap 150 Index Fund NFO? What are the risk factors in this mutual fund?
Also Read: Best Midcap Mutual Funds to invest
Aditya Birla Sun Life 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.
|Scheme reopens for continuous purchase/sale||Within 5 days from date of allotment|
|Minimum Lumpsum||Rs 500|
|Minimum SIP||Rs 500 for 6 months|
|NAV of the fund||Rs 10 during NFO period|
|Exit Load||< 90 days – 0.5%
> 90 days – Nil
|Max expense Ratio (TER)||1.00%|
|Benchmark||Nifty Midcap 150 TR Index|
What is the investment objective of the Aditya Birla Sun Life Nifty Midcap 150 Index Fund?
The investment objective of the Scheme is to provide returns that closely correspond to the total returns of securities as represented by Nifty Midcap 150 Index, 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|
|Equity & Equity related securities constituting the
Nifty Midcap 150 Index
|95%||100%||Medium to High|
|Debt and Money Market 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 capitalization from NIFTY 500. This index intends to measure the performance of mid market capitalization 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.
Why to invest in Aditya Birla Sun Life Nifty Midcap 150 Index Fund?
Here are a few reasons to invest in such index funds.
1) This fund replicates and invest in a 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) The Midcap index has outperformed in the long run. Thought this index is launched 5 years back, considering the base data from 2005, it delivered 16% annualized returns in the last 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 might invest in derivatives too, which are considered as high risk.
3) It invests maximum of 5% in debt instruments. There is interest rate risk and risk of downgrade of corporate credit ratings.
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).
Here is the performance chart of the NAV of this index since 2005.
Also Read: Best Mutual Funds in the last 15 years
Should you invest in the Aditya Birla Sun Life Nifty Midcap 150 Index Fund?
Aditya Birla Sun Life Nifty Midcap 150 Index Fund invests in 150 midcap companies in India based on the weightage. This index has outperformed and delivered 16% annualized return since 2005, 20% annualized returns in last 5 years and 40% returns in last 1 year. High risk investors can invest in such index funds. Moderate to low risk investors should stay away from such funds.
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