Bandhan Nifty Total Market Index Fund NFO – Issue Details and Review

Bandhan Mutual Funds are coming up with Total Market Index Fund NFO. This NFO would open for initial subscription on 24 June, 2024 and closes on 5 July, 2024. It would re-open after 5 working days for further subscription. This fund would invest in total market index that contains 750 stocks. Should you invest in Bandhan Nifty Total Market Index Fund NFO? What are the risk factors in such mutual fund schemes?

Bandhan Nifty Total Market Index Fund NFO – Issue Details

Fund Name Bandhan Nifty Total Market Index Fund
NFO Opens 25-Jun-24
NFO closes 05-Jul-24
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Application Amount Rs1,000 and in multiples of Rs  1 thereafter
Minimum SIP Rs 100 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load 0.25% – if redeemed on or before 15 days from the allotment date
Risk Very High Risk
Benchmark Nifty Total Market TRI
Fund Manager Nemish Sheth

What is the scheme objective and where does it invest?

The investment objective of the Scheme is to replicate the Nifty Total Market Index by investing in securities of the Nifty Total Market Index in the same proportion / weightage with an aim to provide returns before expenses that track the total return of Nifty Total Market Index, subject to tracking errors.

This scheme would invest in total market index and small portion in debt component. Here are the allocation details.

Type of instruments Min % Max % Risk Profile
Securities belonging to the Nifty Total Market Index
(including stock & index derivatives)
95% 100% Very high
Debt and Money Market Instruments 0% 5% Low to Moderate

What is Total Market Index?

  • The Nifty Total Market Index will track the performance of 750 stocks covering large, mid, small and micro cap segments.
  • All stocks that are part of Nifty 500 index and Nifty Microcap 250 index form part of the Nifty Total Market index. The weight of the stocks in the index is based on their free-float market capitalization.
  • This index was launched in Oct-2021, however base data was created from April, 2005.
  • This index sector representation is Financial Services (28.2%), Oil, Gas & Consumable Fuels (8.7%), IT (8.3%), Automobile and Auto Components (7.4%), FMCG (6%), Capital Goods (6.3%), Healthcare (5.5%), Power (4%), Metals & Mining (3.8%) etc.,
  • This index top 10 constituents are HDFC Bank, Reliance Industries, ICICI Bank, Infosys, L&T, ITC, TCS, Bharti Airtel, Axis Bank and SBI.
  • As per the NiftyIndices, Nifty Total Market Index has delivered 15.2% CAGR returns since inception in 2005. Its last 5 years CAGR returns are at 18.1% and last 1 year returns are 36.1%.

Bandhan Nifty Total Market Index Fund NFO – Positive Factors

Investors can consider these positive factors:

  • This index contains Nifty 500 + Nifty Microcap 250 = 750 stocks. Such large list of stocks provides good diversification of stocks across large cap, midcap, smallcap and microcap segment.
  • India’s GDP growth was at 9th rank in 2023, 5th rank in 2023 and expected to be at 3rd rank in 2028 (next 4 years from now). This provides significant opportunities for investors to invest in India’s growth story in the coming years.
  • Like I indicated in our earlier articles, investing in large cap component provides stable returns and investing in midcap/smallcap can provide very high returns while these comes with risk too.

Risk Factors in Bandhan Nifty Total Market Index Fund NFO

Everything is not rosy. Here are some major risk factors.

  • This total market index has 150 Midcap stocks and 250 small cap stocks which are very high risk.
  • This index has 250 microcap stocks too which are very high risk. Generally, micro cap stocks have low liquidity and high volatility. There are several instances where investors have lost their money when they invested in individual stocks in microcap segment.
  • Investors can read all risk factors indicated in the Bandhan Nifty Total Market Index Fund NFO Prospectus

Bandhan Nifty Total Market Index Fund NFO – Should you invest?

This mutual fund scheme invests in Total market index that consists of 750 stocks across large cap, midcap, smallcap and microcap segment. While large cap segment provides stable returns, midcap and smallcap stocks are high risk and generate high returns too. Microcap component of the index is very high risk and highly volatile too.

High risk investors who are willing to invest for medium to long term can invest in such funds. Low or moderate risk investors should stay away from such funds.

Suresh KP

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