Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO - Review

Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO – Review

Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO - ReviewAditya Birla Sun Life Nifty 50 Equal Weight Index Fund – NFO Review

Aditya Birla Sun Life has launched Nifty 50 Equal Weight Index fund that opens for subscription on 19th May 2021. As the name indicates, this fund would invest in the stocks that are part of Nifty 50 Equal Weight Index. This index has delivered 13.7% annualised returns in the last 25 years since inception. Should you invest in Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO? What are the risk factors in this mutual fund?

Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund – NFO issue details

This is an open-ended index fund replicating / tracking Nifty 50 Equal Weight Index.

Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO would open for subscription on Wednesday, May 19, 2021 and closes on Wednesday, June 02, 2021. It reopens after 5 business days for further subscription.

Here are the NFO issue details.

Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO SID

What is the investment objective of the Aditya Birla Sun Life Nifty 50 Equal Weight 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 50 Equal Weight TR 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 the allocation pattern of this index fund:

Type of instruments Min % Max % Risk Profile
Equity & Equity related securities constituting the Nifty 50 Equal
Weight Index
95% 100% Medium to High
Debt and Money Market instruments 0% 5% Low to Medium

What does Nifty 50 Equal Weight Index contain?

The NIFTY50 Equal Weight Index represents an alternative weighing scheme to its market capitalization weighted parent index, the NIFTY 50 Index. The index includes the same constituents as its parent, however, weighted equally.

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

Sector distributoin of Nifty 50 Equal Weight Index till 2021

Top Stocks in Nifty 50 Equal Weight Index till 2021

Why to invest in Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO?

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

1) This fund invests in index of Nifty 50 stocks equally. Nifty50 stocks are blue chip stocks that can provide stable returns in the medium to long term.

2) This index has provided stable returns in the last 1 year, 5 years and since inception. If you observe, this index gave 13% annualised returns in the last 5 years and 14% annualised returns since inception.

3) You might have doubt whether you have invested in the top large cap fund and whether it would perform well or not in the long term. In case of Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund, there are greater chances that this index would perform well in the long run based on past performance in the last 20-25 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 Nifty 50 stocks. Any investment in direct equity is considered as high risk.

2) This index fund has equal weights of Nifty 50 stocks. However, Nifty 50 index stocks have different weightages. In future Nifty 50 index might over perform compared to Nifty 50 equal weightage index. It is like Nifty going up, but not your portfolio value.

3) It invests up to 5% in debt instruments. There is interest rate risk, credit risk, liquidity risk etc., with corporate debt instruments.

4) This index has performed well in the last 5 years, which is majorly due to current bull run in 2020/2021. Such bull runs might not come frequently.

5) Investors should read the SID / KIM / prospectus for all risk factors before investing in such mutual funds.

How is the Performance of Nifty 50 Equal Weight Index?

Now, let us look at the performance of the underlying index. Total returns include dividends, interest and rights received by the shareholders (if any).

Performance of Nifty 50 Equal Weight Index till 2021

Should you invest in Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund NFO?

Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund invests in Nifty Next 50 index stocks on equal weightage. This index generated stable returns and delivered 14% annualised return since inception, 13% annualised returns in last 5 years and 66% 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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