Navi Mutual Fund has launched ELSS Tax Saver Nifty 50 Index Fund NFO. As the name indicates, this fund would invest in the stocks that are part of Nifty 50 Index and also provide tax savings. This index has delivered 11% annualized returns in the last 5 years. Should you invest in Navi ELSS Tax Saver Nifty 50 Index Fund NFO? What are the risk factors in this mutual fund?
Navi ELSS Tax Saver Nifty 50 Index Fund – NFO issue details
This is an open-ended index fund replicating / tracking Nifty 50 Index. Here are the NFO issue details.
|Scheme reopens for continuous purchase/sale||Within 5 working days|
|Minimum Lumpsum||Rs 500|
|Minimum SIP||Rs 500|
|NAV of the fund||Rs 10 during NFO period|
|Risk||Very High Risk|
|Benchmark||Nifty 50 TRI Index|
|Fund Manager||Mr. Aditya Mulki|
|Current Expense Ratio||0.12%|
What is the investment objective of Navi ELSS Tax Saver Nifty 50 Index Fund?
The investment objective of the scheme is to invest in companies whose securities are included in the Nifty 50 Index and to endeavor to achieve the returns of the index, though subject to tracking error.
Investment in this scheme would be subject to statutory lock-in period of 3 years from the date of allotment to be eligible for income tax benefits under section 80C.
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 Instruments covered by Nifty 50 Index||95%||100%||High|
|Debt and Money Market Securities||0%||5%||Low to Medium|
What does Nifty 50 Index contain?
1) The Nifty 50 index is a well-diversified 50 companies index reflecting overall market conditions.
2) Nifty 50 Index is computed using free float market capitalization method.
3) Nifty 50 can be used for a variety of purposes such as benchmarking fund portfolios, launching of index funds, ETFs and structured products.
Top Constituents by weightage
How is the Performance of Nifty 50 Index?
Now, let us look at the performance of the underlying index where this fund is going to invest.
Why to invest in Navi ELSS Tax Saver Nifty 50 Index Fund NFO?
Here are a few reasons to invest in such index funds.
1) This fund invests in Nifty 50 companies. These are blue chip stocks that can provide better risk adjusted returns in the medium to long term.
2) Such index offers diversification benefits at stock level and sector level.
3) This index has provided stable returns in the last 5 to 10 years and since inception. If you observe, this index generated 11.2% annualized returns in the last 5 years and 11.1% annualized return since inception.
4) Investment in this fund qualifies for income tax benefit u/s 80C up to Rs 1.5 Lacs during the financial year.
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 fund invests in 50 stocks, which is like investing in direct equity (as it invests in specific stocks). Any investment in direct equity is considered as high risk.
2) This fund has lock-in period of 3 years from the date of investment. If you are investing through SIP, each SIP installment would have 3 year lock-in period too.
3) It invests up to 5% in debt instruments. There is interest rate risk, re-investment risk, credit risk and liquidity risk.
4) Investors should read the SID before investing in such mutual funds.
Also Read: High Dividend Paying Stocks in 2023
Should you invest in Navi ELSS Tax Saver Nifty 50 Index Fund NFO?
Navi ELSS Tax Saver Nifty 50 Index Fund invests in Nifty 50 index stocks and comes with low expense ratio. This index has generated risk adjusted returns of 11% annualized return in the medium to long term. This fund also provides tax benefits u/s 80c upto Rs 1.5 Lacs during the financial year.
On the other hand, active ELSS mutual funds generated 12% to 22% annualised returns in the last 10 years and 5% to 21% annualised returns in the last 5 years.
High risk investors who are looking for tax savings and also stable returns can opt for such funds.
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