Edelweiss AMC on Thursday launched NFOs (new fund offers) for its three new index funds: Edelweiss Nifty Next 50 Index Fund, Edelweiss Nifty Midcap 150 Momentum 50 Index Fund, and Edelweiss Nifty Small-Cap 250 Index Fund.
The NFOs will remain open from November 10-24, 2022. The funds will benchmark the National Stock Exchange’s (NSE) Nifty Next 50 Index, Nifty Midcap 150 Momentum 50 Index, and Nifty Smallcap 250 Index, respectively, for performance.
In a press release on Wednesday, the fund house said the funds offer investors a low-cost multi-cap portfolio with exposure to high-growth firms through Edelweiss Nifty Next 50 Index Fund, rule-based momentum via the Edelweiss Nifty Midcap 150 Momentum 50 Index Fund, and emerging leaders through Edelweiss Nifty Smallcap 250 Index Fund. The major advantage is their diversification across industries and market capitalization with a low expense ratio.
Balancing Risk
It is a technique to minimise risk by investing in large-cap, mid-cap, and small-cap assets. The aim is to balance the risk and return ratio. Risk-averse investors can keep a portion of the funds in small-cap for exposure to the best small-cap firms. The Nifty 250 Small-Cap Fund tracks companies ranked 250-500 based on their market cap.
Stock Selection
Describing how the Nifty Next 50 Index Fund would work, Edelweiss said it would mimic the constituents of the Nifty Next 50 Index by choosing the 50 best firms from the NIFTY 100 Index based on their free-float market capitalisation.
The Edelweiss Nifty Midcap 150 Momentum 50 Index Fund aims to mimic the Nifty Midcap 150 Momentum 50 Index constituents. The index includes 50 companies with the highest momentum score, calculated by adjusting the last six and 12-month price returns for volatility.
The company's weight is calculated by multiplying the stock's free-float market cap by the momentum score. The fund house said that each stock in the index is limited to less than 5 per cent or five times its index weight based on a free-float market cap.
The Edelweiss Nifty Small Cap 250 Index Fund will attempt to mimic the components of the Nifty Small Cap 250 Index. It will choose the stocks based on their performance and free-float market capitalization.
