Passively-managed funds are on the rise and they are getting a good response from investors too. The swelling assets under management (AUM) in passively-managed funds in the last two years is evidence of investors’ confidence in them. In the last two-year period, their AUM has grown two-and-a-half times. In November 2019, the total AUM in passively managed fund was Rs 1,60,000 crore, which has grown to Rs 4,04,000 crore in November 2021. This astounding rise could be attributed to a flurry of passively managed funds launched last year. In 2021, launch of 50 passively manged funds garnered around Rs 1,50,000 crore.
Continuing with the current momentum of passively-manged schemes, Axis Mutual Fund is all set to roll out the new fund offer (NFO) of Axis Nifty Next 50 Index Fund from January 7,2022. The scheme will mimic the performance of subset of Nifty 100 index, the Nifty Next 50.
What Is The Nifty Next 50 Index?
The Nifty Next 50 index is designed to measure the performance of 50 companies from the constituents of Nifty 100 index after excluding the constituents of Nifty 50 Index. This essentially means companies from number 51-100 in terms of market capitalisation.
Nifty Next 50 is spread across 13 distinct industries. Based on free-float market capitalisation, the Nifty Next 50 index is structured in a manner that leverages the potential of the companies that will form the next generation of market leaders. In the wake of recent circumstances, several companies have remodelled themselves and showcased growth capabilities on the back of several measures such as strong funding, management pedigree, revamped or new business models, etc. Furthermore, the index is re-balanced on a semi-annual basis to ensure exposure to new businesses within the respective broad sector.
How Has Nifty Next 50 Fared?
The Nifty Next 50 index has a decent performance track record. It has outperformed the broadly tracked Nifty 50 index with a good margin in the last 10 years—the Nifty Next 50 index has given 17.76 per cent returns as compared to 14.55 per cent by Nifty 50 index. However, this index has lagged Nifty 50 on three- and five-year basis.
Should You Invest?
Passively-managed funds give you market-like returns, relying on broader market wisdom while removing the risk of stock selection. Transparency in stock selection makes index funds an ideal option for investors who do not want to take the risk of fund managers’ stock selection.
The Axis Nifty Next 50 Index Fund allows you the benefit of investing in future blue-chip companies. “The Axis Nifty Next 50 Index Fund comes at a time when investors have understood the importance of passive strategies to leverage the growth of the next generation of leaders, while ensuring market benchmark returns. We are confident that this fund will be a notable add-on that will yield long-term wealth creation opportunities for our investors,” says Chandresh Nigam, MD and CEO, Axis Mutual Fund.