Baroda BNP Paribas Nifty 50 Index Fund – NFO Issue Details

Baroda BNP Paribas has launched the Nifty 50 Index Fund NFO (New Fund Offer). As the name indicates, Baroda BNP Paribas Nifty 50 Index Fund would invest in stocks that are part of the Nifty 50 Index. This index has delivered 11% annualized returns in the last 25 years since inception. While investors generally prefer index funds, it’s important to consider these as long-term investments. Should you invest in the Baroda BNP Paribas Nifty 50 Index Fund NFO? What are the risk factors associated with this mutual fund?

Baroda BNP Paribas Nifty 50 Index Fund NFO issue details

This is an open-ended index fund that replicates/tracks the Nifty 50 Index. Here are the details for the NFO.

Fund Name Baroda BNP Paribas Nifty 50 Index Fund
NFO Opens 08-Jan-24
NFO closes 22-Jan-24
Scheme reopens for continuous purchase/sale Within 5 working days
Minimum Application Amount Rs  5,000 and in multiples of Rs  1 thereafter
Minimum SIP Rs 500 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load 0.2% for redemption Within 30 days
Scheme Category Largecap Fund
Risk Very High Risk
Benchmark NIFTY 50 TRI
Fund Manager Neeraj Saxena

Baroda BNP Paribas Nifty 50 Index Fund NFO SID

What is the investment objective of Baroda BNP Paribas Nifty 50 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  50  Total Returns Index before expenses, subject to tracking errors, fees and expenses.

However, there is no assurance that the objective of the Scheme will be realized, and the Scheme does not assure or guarantee any returns

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 and Equity related securities of companies constituting Nifty 50 Index 95% 100% High
Money Market Instruments & Units of Liquid scheme & Cash & Cash equivalents. 0% 5% Low to Medium

What does Nifty 50 Index contain?

The NIFTY 50 index is a well-diversified index comprising 50 companies, reflecting overall market conditions. The NIFTY 50 Index is computed using the free-float market capitalization method.

NIFTY 50 can be used for various purposes, including benchmarking fund portfolios, launching index funds, ETFs, and structured products. Here is the current list of sectors and their weightage in this index, along with the top constituents.

Nifty50 index Constitutents till Dec-23

Nifty50 index Top Constituents

Why Invest in Baroda BNP Paribas Nifty 50 Index Fund NFO?

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

  • Diversified Portfolio: This fund invests in the Nifty 50 index, which consists of a diversified portfolio of stocks. This can significantly contribute to portfolio diversification.
  • Stable Returns: The Nifty 50 index has delivered stable returns, exhibiting a track record of 14% annualized returns in the last 5 years and 11% annualized returns since inception.
  • Long-Term Performance: If you have concerns about the long-term performance of your large-cap or flexicap fund, the Baroda BNP Paribas Nifty 50 Index Fund offers a promising option. Historical data shows strong performance over the long run for such indices.

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.

  • Equity-Like Nature: This index fund invests in 50 stocks which is like direct equity investment. Investing in specific stocks is generally considered high-risk.
  • Debt Instrument Exposure: The fund allocates up to 5% in debt instruments, which has interest rate risk, credit risk, and liquidity risk associated with such instruments.
  • Limited Returns: Returns in this index fund are capped. While the last 5 years have shown an annualized return of 14%, this is largely due to the recent bull runs in 2020 and 2023, which may not be a frequent occurrence. Otherwise, returns could be lower, around 10% to 11%.
  • Investors should read the SID / KIM / prospectus before investing in such mutual funds.

How Does the Nifty 50 Index Performed in the past?

Now, let’s examine the performance of the underlying index in which this fund will invest. Total returns encompass dividends, interest, and rights received by the shareholders (if any).

Nifty50 index Returns

Should You Invest in Baroda BNP Paribas Nifty 50 Index Fund NFO?

Baroda BNP Paribas Nifty 50 Index Fund invests in Nifty 50 index stocks. This index has generated stable returns, delivering an annualized return of 11% since inception and 14% annualized returns in the last 5 years.

This mutual fund scheme may be suitable for high-risk investors with an investment horizon of 5-10 years.

On the other hand, low-risk investors and short-term investors may choose to avoid such investments.

Suresh KP

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