Nippon India Mutual Fund has filed a draft Scheme Information Document (SID) with the Securities and Exchange Board of India (SEBI) for its upcoming offering—Nippon India Nifty 500 Quality 50 Index Fund. This open-ended equity scheme will passively track the Nifty 500 Quality 50 TRI and aims to provide exposure to high-quality companies through a rules-based investing approach.
The objective of the scheme is to generate returns that correspond to the total returns of the Nifty 500 Quality 50 Index, before expenses and subject to tracking errors. It must be noted that there is no guarantee or assurance that the scheme will achieve its objective.
The scheme will use the Nifty 500 Quality 50 Total Return Index (TRI) as its benchmark. This index includes 50 companies from the Nifty 500 universe, selected based on quality parameters such as high return on equity, low financial leverage, and earnings stability.
The indicative asset allocation under normal circumstances is as follows:
| Instrument | Minimum Allocation (%) | Maximum Allocation (%) |
| Securities constituting Nifty 500 Quality 50 Index | 95 | 100 |
| Cash & cash equivalents and Money Market instruments | 0 | 5 |
Additionally, the scheme may engage in equity derivatives (up to 20% of the equity portfolio), securities lending (up to 15% of net assets), and limited investments in liquid and money market mutual fund schemes.
The scheme will adopt a passive investment approach, aiming to replicate the performance of the Nifty 500 Quality 50 Index. It will invest in the same securities and in similar proportions as the index without active stock picking or market timing. The fund may use derivatives and rebalancing to minimise tracking error.
Turnover is expected to be limited to rebalancing activities triggered by changes in the index composition and corporate actions, helping to keep transaction costs low.
The scheme will be managed by Mr Jitendra Tolani, who brings over 18 years of experience in equity markets. He currently manages multiple index and sectoral funds within Nippon India Mutual Fund’s passive investment division.
Both Regular and Direct Plans will be available under:
As an equity index fund, the scheme is exposed to market risk, tracking error, and concentration risk linked to index methodology. It will not actively adjust holdings in response to market movements or macroeconomic events.
The annual recurring expenses are capped at 1% of daily net assets, with additional expenses permissible under SEBI guidelines. Direct plans will have a lower expense ratio as they exclude distribution commissions.
Nippon India Mutual Fund’s proposed Nifty 500 Quality 50 Index Fund aims to provide investors a convenient and low-cost way to access a portfolio of high-quality companies from the broader Nifty 500 universe. As this is a draft filed with SEBI, the fund is currently under review and subject to final approval and updates.
Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.
Mutual Fund investments in the securities market are subject to market risks, read all the related documents carefully before investing.
Published on: Mar 28, 2025, 3:29 PM IST
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