DSP Mutual Fund Launched India’s First Nifty Top 10 Equal Weight Index Fund and ETF
DSP Mutual Fund launched a new investment option called Nifty Top 10 Equal Weight Index Fund and ETF last month, the first of its kind in India. This fund invests equally in the top 10 companies listed on Nifty Index based on market value.
The main idea behind this fund is to take advantage of better prices of these top 10 stocks compared to broader market indices like Nifty 50 and Nifty 500.
Over the years, Nifty’s Top 10 Equal Weight Index has performed well, It has delivered better returns in 9 out of the last 16 years compared to larger indices.
The top 10 stocks are currently undervalued in this index. They have a market value which is lower than usual. Also, these stocks have not done well in the past four years. However, previous trends suggest this could improve in future. When three-year performance has been weak following years often show stronger returns.
Strong Portfolio Quality
This index is known for its strong portfolio quality. It has a return on equity (RoE) that is 1.5 times higher than the Nifty 500 Index according to data from the financial year 2024. About 49% of Nifty 50’s profits come from top 10 stocks.
Anil Ghelani CFA Head of Passive Investments and Products at DSP Mutual Fund said at the of launch “Large and mega-cap stocks are currently trading at attractive prices. Investing where there is a lower valuation and margin of safety is a good strategy. Nifty Top 10 Equal Weight Index can be a valuable part of a long-term portfolio. It offers exposure to the largest companies. This can help reduce losses during downturns. It can generate better returns over time.”
Is This Fund Right for You?
This fund is suitable for investors who want to invest in India’s largest and most stable companies. As an equal-weight strategy, every stock that is a part of the portfolio contributes equally towards performance results from it. This way one company cannot make or break the entire fund’s accomplishment.
Before embarking on an investment adventure, it is crucial for you to think about your financial goals. Also, see what are your risk preferences. In the long run, this fund has the potential to give high returns based on the performance of its top 10 firms. However, it is still crucial to have different assets in a person’s repository.
For those who are believers in major firms’ future prospects; such individuals may include the open-ended companies that in turn diversify these portfolios for long-term investments.
It’s been a month since the fund launched, you can invest in this fund after analysing the 1 month performance.
