NFO alert: SBI Mutual Fund launches SBI Nifty50 Equal Weight Index Fund; details inside

SBI Nifty50 Equal Weight Index Fund is an open-ended index fund scheme launched by SBI Mutual Fund on 16th January 2024. The scheme aims to provide returns that correspond to the total returns of the securities as represented by the underlying index, but there is no guarantee of achieving this objective. The minimum subscription amount is Rs 5,000 and in multiples of Rs 1 thereafter. The New Fund Offer (NFO) closes on 29th January 2024.

The investment objective of the scheme is to provide returns that correspond to the total returns of the securities as represented by the underlying index, subject to tracking errors.

Asset Allocation 

After the initial offering period or while waiting to invest the funds in the Scheme, the money may be temporarily placed in government securities, Triparty Repos, and units of liquid mutual funds until it is fully invested.

The Scheme has the option to use equity derivatives (financial contracts based on the value of stocks) of the companies in the underlying index or the index itself for a short period. This could happen if the securities of the index are not available, are insufficient, or during adjustments due to changes in the index or corporate actions. However, this is allowed only for a brief period, and the exposure to such derivative instruments for purposes other than hedging and rebalancing should not exceed 5% of the total assets of the Scheme.

Investment Strategy 

The Scheme will track the NIFTY 50 Equal Weight Index and will use a “passive” or indexing approach to endeavour to achieve the scheme’s investment objective. Unlike other funds, the scheme will not try to “beat” the market it tracks and does not seek temporary defensive positions when the market declines or appears overvalued.

Fund Manager 

Viral Chhadva, Age: 40 years, Experience: 17 years

At the launch event D P Singh, Deputy MD & Joint CEO, of SBI Funds Management Limited, said, “We continue to expand our bouquet of offerings in the passive investment space. In market-cap weighted indices like NIFTY50, a stock/sector might constitute a large weight (or portion) of the index which sometimes leads the index to be driven by them. The SBI NIFTY50 Equal Weight Index Fund is an opportunity for those who want to take advantage of the merits of passive investing while aiming to benefit from diversification and growth across the largest companies in India by market cap (part of the underlying index) and sectors, which steer India’s economy.”

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.