HDFC Mutual Fund has launched S&P BSE 500 Index that would open for subscription on 6th April, 2023. As the name indicates, HDFC S&P BSE 500 Index Fund would invest in the stocks that are part of S&P BSE 500 Index. This index has delivered 12.4% annualized returns in the last 10 years. Should you invest in HDFC S&P BSE 500 Index Fund NFO? What are the risk factors in this mutual fund?
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HDFC S&P BSE 500 Index Fund – NFO issue details
Here are the NFO issue 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 | S&P BSE 500 Index (TRI) |
| Fund Manager | Mr. Nirman Morakhia Mr. ARUN AGARWAL |
| Max TER | 1.00% |
What is the investment objective of HDFC S&P BSE 500 Index Fund?
To generate returns that are commensurate (before fees and expenses) with the performance of the S&P BSE 500 Index, subject to tracking error.
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 S&P BSE 500 Index |
95% | 100% | Very High |
| Debt Securities & Money Market Instruments, units of Debt Schemes of Mutual Funds |
0% | 5% | Low to Medium |
What does S&P BSE 500 Index contain?
The S&P BSE 500 is designed to be a broad representation of the Indian market. Consisting of the top 500 constituents in the S&P BSE AllCap, the index covers all major industries in the Indian economy.
How is the performance of S&P BSE 500 index?
There are 2 existing mutual funds that were floated 3 years back, however one can look at the overall index performance where this fund would replicate. One can exclude AMC expenses while viewing these returns.
Last 10 years annualised returns – 12.4%
Last 5 years annualised returns – 10%
Last 3 years annualised returns – 27%
Last 1 years returns – minus 2.8%
Why to invest in HDFC S&P BSE 500 Index Fund?
Here are a few reasons to invest in such index funds.
1) This fund invests in the S&P BSE 500 Index which includes large cap / blue-chip stocks, mid cap stocks and small cap stocks. While large cap or blue chip stocks provide stability to a portfolio, Midcap and smallcap stocks can provide very high returns.
2) This fund invests in an index which has a combination of large cap, Midcap and smallcap that offers diversification benefits.
3) This index has provided stable returns in the last 3 to 10 years.
Key Risk Factors of investing in such NFOs
One should consider some of these risk factors / negative factors before investing.
1) This index contains Midcap and smallcap stocks which are at 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) Investors should read the SID / KIM / prospectus before investing in such mutual funds.
Also Read: 5 Star Rated Crisil mutual funds in 2023
Should you invest in HDFC S&P BSE 500 Index Fund NFO?
This HDFC NFO invests in S&P BSE 500 Index stocks. This index has generated risk adjusted returns of 12.4% annualized returns in the last 10 years. This index generated negative returns in last 1 year as there is negative sentiment in overall Indian stock markets.
However, investors should note that this fund invests in the index which has Midcap and small cap stocks that are riskier.
High risk investors can invest in such funds for medium to long term perspective.
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