HDFC Asset Management Company Limited, the investment manager of HDFC Mutual Fund (HDFC Mf) on Monday announced the launch of two new NFO (new fund offer) exchange-traded funds - HDFC NIFTY Next 50 ETF and HDFC NIFTY 100 ETF. Both these NFOs will open on July 25, 2022, and close on August 1, 2022.
According to HDFC Mf, these new ETFs will offer a simple way to gain exposure to the Indian large-cap space. The benchmark for the HDFC NIFTY Next 50 ETF is NIFTY Next 50 Total Returns Index (TRI). It would offer a diversified benefit both at the stock and sector level. HDFC Mf further added that “this index offers higher potential for growth as it could contain the next league of NIFTY 50 constituents.”
Regarding HDFC NIFTY 100 ETF, HDFC Mf said that its benchmark, NIFTY 100 TRI, will offer a simple way to gain exposure to India’s large-cap stocks, focusing on the top 100 companies based on market value. “It provides more balanced diversification than NIFTY 50 Index while tracking the behaviour of the combined portfolio of NIFTY 50 and NIFTY Next 50 Indices,” HDFC Mf said in a press release.
Navneet Munot, MD and CEO, HDFC Asset Management Co. Ltd. said, “The launch of these two funds is part of our endeavour to expand our offerings under ‘HDFC MF Index Solutions’, and provide exposure to customers to India’s large-cap companies that have the ability of delivering competitive risk-adjusted returns.”
The National Stock Exchange (NSE) NIFTY Next 50 index represents 50 companies from the NIFTY 100 after excluding the top NIFTY 50 companies.
As per data from NSE Indices Limited, a subsidiary of the National Stock Exchange (NSE), (refer graph below), the NIFTY NEXT 50 outperformed the NIFTY 50 in the three-year period between July 1, 2019 and July 1, 2022. The NIFTY NEXT 50 returned 10.3 per cent CAGR (compound annual growth rate) and the NIFTY 50 gave a return of 9.9 per cent CAGR.
The graph below shows that the NIFTY NEXT 50 returned 10.3 per cent CAGR for a three-year period between July 1, 2022 and July 1, 2022, while the NIFTY 100 returned 10 per cent CAGR for the same period.
NSE NIFTY 100 is a basket of 100 listed stocks representing diversified sectors of the Indian economy. This index has been constructed representing the top 100 listed companies based on their market capitalisation from the NIFTY 500. However, the portfolio for both NIFTY 50 and NIFTY NEXT 50 has been from the NIFTY 100; hence, the NIFTY 100 is a combination of the two.
The below graph shows the NSE NIFTY 100 returned 10 per cent between July 1, 2019, and July 1, 2022.
The NIFTY 500, from where the NIFTY 100 portfolio is constructed, returned 11.3 per cent in the same period. On the other hand, the NIFTY 50 returned 9.9 per cent as can be seen in the graph above NSE NIFTY Next 50.
