HDFC Mutual fund, a leading Asset Management Company, has launched a new fund offer (NFO) HDFC Nifty Next 50 fund.
NFO – New Offer fund is the first-time subscription of a new fund or scheme that has been introduced by an Asset Management Company (AMC). With the help of the funds, the AMC purchases securities. NFO is inexpensive than the existing funds as it is new.
Once the NFO is over, the fund will be available at the prevailing net asset value (NAV).
The Nifty Next 50 fund will track the prices and the companies in Nifty Next 50 Index. The NFO will be open for eight days, starting from October 22 till October 29.
Nifty Next 50 index is composed of 50 companies from Nifty 100, excluding the companies in the Nifty 50 index. The top stocks in this index as per their weightage are Info Edge, Avenue Supermarkets, Apollo Hospitals, ICICI Lombard General Insurance.
The weightage of the top 3 sectors in Nifty Next 50 is at 58% as compared to 67% of Nifty 50, making it more diversified. This fund is for investors who want to invest in Nifty Next 50 companies in a cost-effective manner.
The launch of the NFO has helped HDFC Mutual fund to extend its product range in passive space. HDFC AMC is one of the oldest players in passive investment strategies, simply tracking an index and making investments on behalf of their customers.
They make investments by hiring professional managers, investing funds in diversified portfolios to reduce the risk of losses and have low trading costs.
The fund will provide exposure to a diversified portfolio, unique and differentiated businesses.
Nifty Next Index has a beneficial risk-reward ratio as compared with Nifty 50. Nifty Next 50 has surpassed and beaten Nifty 50 over 19 years. Out of 75 stocks that were earlier included in the Nifty 50 index, 51 stocks were from Nifty Next 50 Index.
Hence, the investors looking forward to investing in the new NFO might get an opportunity to invest in potential Nifty 50 companies.
HDFC AMC has also filed a paper to launch nine new Exchange-traded funds (ETFs) with the Securities Board of India (SEBI).
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