Understanding Nifty Total Market Index Funds and Their Benefits

A Nifty Total Market Index is a comprehensive index that tracks the performance of publicly traded companies across various market segments, including large-cap, mid-cap, and small-cap stocks. Unlike sector-specific or limited-scope indices, a total market index offers a broad representation of the overall stock market. In this article, learn about the working of the Nifty Total Market Index Fund and how beneficial it can be.

What is Market Capitalisation?

Before understanding the working of a Nifty Total Market Index Fund, let’s quickly learn what is market capitalisation, or market cap,

Market cap is the total value of a company’s outstanding shares. It is calculated using the formula:

Market Cap = Share Price × Number of Outstanding Shares

Companies are categorised into three main market cap segments, large-cap, mid-cap and small-cap. As per SEBI, large-cap companies include the top 100 firms (1st to 100th), mid-cap companies fall within the 101st to 250th ranks, and small-cap companies comprise those ranked 251st and beyond.

Working of Nifty Total Market Index Fund

A Nifty Total Market Index Fund is a type of mutual fund or exchange-traded fund (ETF) that follows a total market index. Investing in such a fund means owning a fraction of every company within the index, offering instant diversification across various stocks and sectors.

The Nifty Total Market Index is a broad-based index that tracks the performance of 750 stocks across large-cap, mid-cap, small-cap, and micro-cap segments. It comprises companies from both the Nifty 500 Index and the Nifty Microcap 250 Index. The stock weightage in the index is determined by free-float market capitalisation, meaning that larger companies have a greater influence on overall performance.

Benefits of a Nifty Total Market Index Funds

A Nifty Total Market Index Fund includes stocks from all market cap categories, providing investors with broad market exposure. Here’s why this approach is beneficial:

• Diversification: A Nifty Total Market Index Fund can reduce risk as it invests across large, mid, and small-cap stocks. If one segment underperforms, gains in another can balance the portfolio.
• Long-Term Growth Potential: While large-cap stocks can provide stability, mid- and small-cap stocks can offer growth potential. A Nifty Total Market Index Fund captures this mix, helping investors benefit from overall market expansion.
• Lower Risk Compared to Individual Stocks: Investing in a single stock or sector can be risky. A Nifty Total Market Index Fund spreads investments across multiple industries and company sizes, reducing the impact of a single stock’s decline.
• Simplicity in Investing: For investors who don’t want to track individual stocks, a Nifty Total Market Index Fund can offer an easy way to invest in the broader market without frequent adjustments.

Angel One Nifty Total Market Index Fund

Angel One AMC has launched two new mutual funds that consider Nifty Total Market TRI as the benchmark.

• Angel One Nifty Total Market ETF
• Angel One Nifty Total Market Index Fund

These funds from Angel One AMC provide exposure to 93% of the total market capitalisation through a single investment. The new fund offer (NFO) was open from February 10 to February 21, 2025, offering investors an opportunity to invest in a diversified index.

Conclusion

A Nifty Total Market Index Fund can provide a well-balanced investment strategy by covering all market cap segments. It can offer diversification, growth potential, reduced risk and more, making it a choice for long-term investors.

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 are subject to market risks, read all scheme-related documents carefully.