HDFC Nifty Midcap 150 Index Fund NFO – Should you invest?

HDFC has launched Nifty Midcap 150 Index Fund that would open for subscription on 6th April, 2023. This fund would invest in a NIFTY Midcap index, which has 150 Midcap companies. This index has delivered 16% annualized returns in the last 17 odd years. Should you invest in HDFC Nifty Midcap 150 Index Fund NFO? What are the risk factors in this mutual fund?

Also Read: 5 Mutual Funds with 5 Star Rating from CRISIL

HDFC Nifty Midcap 150 Index Fund – NFO Issue details

Here are the new fund scheme details.

Scheme Opens 06-Apr-23
Scheme Closes 18-Apr-23
Scheme reopens for continuous purchase/sale Within 5 business days
Minimum Lumpsum Rs 100
Minimum SIP Rs 100 for 6 months
NAV of the fund Rs 10 during NFO period
Entry Load Nil
Exit Load Nil
Risk Very High
Benchmark NIFTY Midcap 150 TRI
Fund Manager Mr. Nirman Morakhia
Max TER 1.00%

HDFC Nifty Midcap 150 Index Fund SID

What is the investment objective of HDFC Nifty Midcap 150 Index Fund?

To generate returns that are commensurate (before fees and expenses) with the performance of the NIFTY Midcap 150 Index, subject to tracking error.

There is no assurance or guarantee that the investment objective of the scheme will be realized.

HDFC Nifty Midcap 150 Index Fund NFO - Should you invest

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 Midcap
150 Index
95% 100% Very High
Debt Securities & Money Market
Instruments, units of Debt Schemes of
Mutual Funds
0% 5% Low to Medium

What does Nifty Midcap 150 Index Fund contain?

NIFTY Midcap 150 represents the next 150 companies (companies ranked 101-250) based on full market capitalisation from NIFTY 500. This index is intended to measure the performance of mid market capitalisation companies.

NIFTY Midcap 150 Index is computed using free float market capitalization method, wherein the level of the index reflects the total free float market value of all the stocks in the index relative to particular base market capitalization value.

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

Nifty Midcap 150 index - Sectors

Nifty Midcap 150 index - Top Constituents

Why to invest in HDFC Nifty Midcap 150 Index Fund?

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

1) This fund invests and replicates NIFTY Midcap 150 index. If you want to tap opportunities in Midcap segment, you can invest in such funds.

2) Midcap stocks have the potential to turn to large cap and blue chip companies in short to medium term. Hence, one can tap such opportunities by investing in such funds.

3) The Midcap index has outperformed in the long run. Thought this index is launched 5 years back, considering the base data from 2005, it delivered 16% annualized returns in the last 17 years.

Key Risk Factors of investing in this New Fund Offer

One should consider some of these risk factors / negative factors before investing.

1) This index fund invests in midcap stocks which are high risk. One can see high volatility in share prices of Midcap stocks.

2) This fund might invest in derivatives too, which are considered as high risk.

3) It invests maximum of 5% in debt instruments. There is interest rate risk and risk of downgrade of corporate credit ratings.

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

How is the Performance of Nifty Midcap 150 Index Fund?

Now, let us look at the performance of the underlying index where this fund would go to invest. Total returns include dividends, interest and rights received by the shareholders (if any).

Nifty Midcap 150 index - Performance in 2023

Also Read: 5 Debt Funds with highest SIP returns in 10 years

Should you invest in HDFC Nifty Midcap 150 Index Fund NFO?

This HDFC Nifty Midcap 150 Index Fund invests in an index which has 150 Midcap companies. This index has outperformed and delivered a 16% annualized return since 2005, 11.8% annualized returns in last 5 years and 8.3% returns in last 1 year.

On the other side, Midcap stocks are at high risk. Sometimes, these can significantly under perform too.

High risk investors can invest in such mid cap index funds. Moderate to low risk investors should stay away from mutual funds.

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Suresh KP

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