ICICI Prudential Mutual Fund on September 14, 2022 announced the launch of ICICI Prudential Nifty50 Equal Weight Index Fund. The scheme will invest in the constituents of the Nifty50 Equal Weight Index.
The new fund offer (NFO), which opened today will close on September 28, 2022, ICICI Mutual Fund announced in a press release.
The minimum application offer during the NFO will be Rs. 5,000 and in multiples of Re. 1. The minimum additional application amount will also be Rs. 5,000.
Investment can also be done through systematic investment plan (SIP) during the NFO or the ongoing offer period for Rs. 1,000 and in multiples of Re. 1 in either daily, weekly, fortnightly or monthly modes with minimum of six instalments. The quarterly SIP will be Rs. 5,000 and in multiples of Re 1 for a minimum of four instalments.
According to the press statement, as compared to the Nifty 50 index, an equal weight index is less concentrated in terms of the top-5 sectors.
The Nifty50 is concentrated in the financial services; IT; oil, gas and consumable fuels; FMCG; and automobile and automotive components in 37, 14.2, 13.4, 8.7 and 6 per cent respectively, weightage-wise. Elsewhere, the Nifty50 Equal Weight is concentrated in financial services; automobile and automotive components; FMCG; healthcare; and IT in 23.3; 11.7; 9.9; 9.3; and 8.7 per cent respectively, weightage-wise, the statement said.
Besides, an equal weight index has empirically higher dividend yield as compared to a market capitalisation weighted index, as it allocates funds equally to its components.
All this, and the fact that the Nifty50 Equal Weight Index has grown at 14.15 annually since the beginning of 2005, makes it suitable for long-term investment, the statement added.
According to the press statement, the fund offers six benefits to investors, namely: exposure to bluechip stocks, higher dividend yield, relatively better returns, diversification, smart beta characteristics, as well as allows non-demat account holders to seek exposure to an equal weighted index fund.
The product also offers the benefit of booster systematic transfer plan (STP) with dual benefits of variable amount and variable tenure, the statement added.
Chintan Haria, head – product development & strategy, ICICI Prudential AMC, said, “Since indices perform differently under variable market conditions, it is prudent to diversify across indices with different weightage methodology. Nifty50 Equal Weight Index is less concentrated in the top-5 sectors as compared to the Nifty 50 Index, thus providing an excellent diversification opportunity.”
“Also, there is no size bias as the index tries to reduce the impact of bigger companies on the index performance,” he added.