HDFC Nifty Next 50 Index Fund - NFO Issue Details and Review

HDFC Launches Nifty Next 50 Index Fund NFO – Review

HDFC Nifty Next 50 Index Fund - NFO Issue Details and ReviewHDFC Launches Nifty Next 50 Index Fund NFO – Review

HDFC Mutual Fund has launched Nifty Next 50 Index Fund that would open for subscription on 22nd October, 2021. As the name indicates, HDFC Nifty Next 50 Index Fund would invest in the stocks that are part of Nifty Next 50 Index. This index has delivered 21% annualized returns in the last 19 years since inception. Should you invest in HDFC Nifty Next 50 Index Fund NFO? What are the risk factors in such mutual funds?

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HDFC Nifty Next 50 Index Fund – NFO issue details

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

HDFC Nifty Next 50 Index Fund NFO would open for subscription on Friday, 22nd October and closes on Friday, 29th October, 2021. It reopens within 5 working days for further subscription.

Here are the NFO issue details.

Scheme Opens 22-Oct-21
Scheme Closes 29-Oct-21
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Lumpsum Rs 5,000
Minimum 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
Benchmark NIFTY Next 50 TRI
Fund Manager Mr. Krishan Kumar Daga
Max TER 1.00%

HDFC Nifty Next 50 Index Fund NFO Scheme Information Document (SID)

What is the investment objective of the HDFC Nifty Next 50 Index Fund?

To generate returns that are commensurate (before fees and expenses) with the performance of the NIFTY Next 50 Index TRI (underlying 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
Securities covered by NIFTY Next 50 Index 95% 100% Very High
Debt and Money Market Instruments 0% 5% Low to Medium

What does Nifty Next 50 Index contain?

1) The NIFTY Next 50 Index represents 50 companies from NIFTY 100 after excluding the NIFTY 50 companies.

2) Cumulative weight of index constituents that are not available for trading in F&O segment (non F&O stocks) is capped at 15% on quarterly rebalance dates.

3) Weightages of non F&O stocks in the index are individually capped at 4.5% on quarterly rebalance dates.

4) Index is re-balanced on semi-annual basis. The cut-off date is January 31 and July 31 of each year.

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

HDFC Nifty Next 50 Index Fund Review - Index constituents by sector

HDFC Nifty Next 50 Index Fund Review - Top Index constituents

Why to invest in HDFC Nifty Next 50 Index Fund?

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

1) This fund invests in Nifty Next 50 which are part of NIFTY100 and after excluding NIFTY50 stocks. These are blue chip stocks (beyond NIFTY50) that can provide better risk adjusted returns in the medium to long term.

2) This fund invests in index that offers diversification benefit at stock level and sector level.

3) Nifty Next 50 index provides exposure to unique businesses.

4) This index has provided stable returns in the last 1 year, 5 years and since inception. If you observe, this index gave 14.4% annualized returns in the last 5 years and 21% annualized returns since inception.

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 50 stocks beyond NIFTY50 that are part of NIFTY100. This is like investing in direct equity (as it invests in specific stocks). Any investment in direct equity is considered as high risk.

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

3) While fund manager would invest in the stocks that are part of index in same proportion, there could be tracking error and the returns of index and fund might differ.

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

How is the Performance of Nifty Next 50 Index?

Now, let us look at the performance of the underlying index where this fund is going to invest.

HDFC Nifty Next 50 Index Fund Review - Index annualised returns, return risk ratio

How are the rolling returns of Next Nifty 50 Index?

Let us see this aspect too.

HDFC Nifty Next 50 Index Fund Review - Rolling returns performance

Also Read:  Debt Funds that generated over 7% returns consistently every year

Should you invest in HDFC Nifty Next 50 Index Fund?

HDFC Nifty Next 50 Index Fund invests in Nifty Next 50 index stocks. This index has generated risk adjusted returns of 21% annualized returns since inception, 17% annualized returns in last 10 years, 14% annualized returns in the last 5 years and 58% returns in last 1 year. Nifty Next 50 index is relatively high risk compared to Nifty 50 index. 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

2 thoughts on “HDFC Launches Nifty Next 50 Index Fund NFO – Review”

  1. Suresh, I greatly appreciate your hardwork, research and passion to keep the masses informed about Investment Products. I have been going through your blog for more than 2-3 years now.
    It has been very helpful.
    Thanks to you and your team!

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