has launched Large & Midcap Index Fund (NFO) that has opened for subscription now. This fund would invest in a Nifty LargeMidcap 250 Index, which consists of 250 large and mid cap companies based on market cap. This index has delivered 17% annualized returns in the last 5 years. Should you invest in Edelweiss Large & Midcap Index Fund NFO? What are the risk factors of investing in this mutual fund?
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Edelweiss Large & Midcap Index Fund – NFO Issue details
This is an open-ended index fund replicating / tracking Nifty LargeMidcap 250 Index. Here are the NFO issue details.
| Scheme Opens | 15-Nov-21 |
| Scheme Closes | 26-Nov-21 |
| Scheme reopens for continuous purchase/sale | 10-Dec-21 |
| Minimum Lumpsum | Rs 5,000 |
| Minimum SIP | Rs 500 for 12 months |
| NAV of the fund | Rs 10 during NFO period |
| Entry Load | Nil |
| Exit Load | Nil |
| Risk | Very High Risk |
| Benchmark | NIFTY LargeMidcap 250 Total Return Index |
| Fund Manager | Mr. Bhavesh Jain |
| Max TER | 1.00% |
Edelweiss Large & Midcap Index Fund SID
What is the investment objective of the Edelweiss Large & Midcap Index Fund?
It is an Open-ended equity scheme replicating Nifty LargeMidcap 250 Index.
The investment objective of the scheme is to provide returns before expenses that closely correspond to the total returns of the Nifty LargeMidcap 250 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 and equity related securities constituting the Nifty LargeMidcap 250 Index |
95% | 100% | High |
| Debt and Money Market instruments | 0% | 5% | Low to Medium |
What does Nifty LargeMidcap 250 Index contain?
NIFTY LargeMidcap 250 reflects the performance of a portfolio of 100 large cap and 150 mid cap companies listed on NSE, represented through the NIFTY 100 and the Nifty Midcap 150 index respectively. The aggregate weight of large cap stocks and mid cap stocks is 50% each and are reset on a quarterly basis.
Here is the list and their weightage in this index by sector and top constituents as of now.
How is the Performance of Nifty LargeMidcap 250 Index?
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.
Is this index fund good for SIP for long term?
This index has outstanding performance if invested through SIP in the last 5 to 15 years. If one would have invested Rs 10,000 per month through SIP, here is how is how the investment would have grown in the last 3 to 15 years.
Why to invest in Edelweiss Large & Midcap Index Fund?
Here are a few reasons to invest in such index funds.
1) This fund replicates and invest in a NIFTY LargeMidcap 250 index. In simple terms this index contains 100 largecap companies and 150 midcap companies. If you want to tap opportunities from top 250 companies in India, it is the best bet for you.
2) This fund invests in an index which consists of top 100 large cap companies (NIFTY50 + Nifty Next50) which are blue-chip companies. You can see India’s growth story coming from these companies.
3) This fund invests in the index which has top 150 Midcap companies. While large cap companies provide stable returns, Midcap companies come with risk, however, provides higher returns in the medium to long term.
4) If you want to invest in passive funds that replicates large cap + Midcap index, this fund is suitable to you.
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 is highly volatile and hence high risk. If you go through the performance chart, you would have seen almost zero returns between 2008 to 2014 and similarly between 2015 to 2017.
2) This index fund invests in Midcap stocks which are high risk. They can erode your capital in the short term.
3) This is a passive fund i.e. reflects the index. The fund Manager does not have any role in removing the stock from the portfolio even if it is bad performer.
4) This is a passive fund that replicates the index. While fund manager would try to replicate the index, there could be tracking error.
5) It would invest in derivatives too, which are considered as high risk.
6) It invests up to of 5% in debt instruments. There is interest rate risk and default risk.
7) Investors should read the complete scheme related documents before investing in such mutual funds.
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Should you invest in Edelweiss Large & Midcap Index Fund NFO?
Edelweiss Large & Midcap Index Fund invests in the Nifty LargeMidcap 250 index, which contains Nifty50 + Nifty Next50 + Top 150 Midcap companies in India based on market capitalization. This index has outperformed and delivered 16% annualized return since 2005, 17% annualized returns in last 5 years and 65% returns in last 1 year. Investors should understand the risk in passive funds. One should check the under performance / zero returns during 2008 to 2014 and 2015 to 2017. Investors need to have patience and cannot expect instant returns / returns for short term from such funds. Since it invests in mid cap companies, it is high risk fund. If you are a high-risk investor and want to invest for 8 to 10 years, you may invest in such index funds. Moderate to low risk investors should stay away from such funds.
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Should we invest in it for 5 years horizon?
There are already Nifty50 index funds existing in the market that replicates the Nifty50 index, hence skipped this NFO for this time. These are good for long term of 8-10 years. For 5 years, you should avoid