SBI Mutual Fund has announced the launch of SBI Nifty50 Equal Weight exchange-traded fund (ETF). The scheme will track the Nifty50 Equal Weight Index, which is based on an equal-weight approach. This is unlike the Nifty50 index, which is based on market capitalisation.
NFO Details
The new fund offer (NFO) will remain open from July 8-12, 2024. The minimum investment amount is Rs 5,000 and in multiples of Re 1. The units under the scheme will be listed on the NSE and the BSE, and can be bought and/or sold on all trading days.
Investment Objective
According to SBI Mutual Fund, the stocks forming part of the Nifty50 Equal Weight Index are the same as in the Nifty50, and all the stocks have the same weight. This is an approach that would largely enable the index to denote broad-based exposure to the growth potentials of the country’s leading firms, instead of focusing on a few heavyweight stocks or sectors.
There will be equal allocation to the 50 largest companies in India, and the index will provide a broad-based growth potential across stocks and sectors.
The investment objective of SBI Nifty50 Equal Weight ETF is to give returns that closely correspond with the total returns of the underlying index, subject to tracking error, SBI Mutual Fund said in a statement.
SBI Mutual Fund further said the scheme will invest 95-100 per cent in the securities constituents of the NIFTY50 Equal Weight Index TRI, and the balance in Government securities (G-secs), state development loans (SDLs), treasury bills, including triparty repo, and units of liquid mutual funds.
According to SBI Mutual Fund, the product is suitable for investors who are seeking long-term capital appreciation and want to invest in securities covered by Nifty50 Equal Weight Index. By investing in the Nifty50 Equal Weight index, investors will have an opportunity to invest in an alternative weighting index to the Nifty 50.
It further said that there are a few advantages to the Nifty50 Equal Weight index in comparison to the conventional capitalisation-weighted indices. It will offer less impact from large-cap stocks and provide wider exposure from different sectors and industries within the equity market.
