DSP Mutual Fund has filed papers with SEBI for the DSP Nifty 50 Index Fund. The new scheme will be an open-ended passively managed fund that replicates the Nifty 50 Index. The new fund is open-ended so you will be able to invest in and redeem units of the scheme on all business days. In recent months, other fund houses have also launched passively managed schemes that track the Nifty 50 Index such as the Indiabulls Nifty 50 ETF, Mirae Asset Nifty 50 ETF and Tata Nifty Exchange Traded Fund.
DSP Nifty 50 Index Fund will invest primarily (95 – 100% of assets) in equity and equity derivatives of the 50 largest companies in India (according to market cap) that are featured on the Nifty 50 Index. The remaining assets (up to 5% of scheme assets) will be invested in various debt and money market securities. The scheme will however not invest in foreign securities, securitized debt, credit default swaps and repos of corporate debt/money market securities.
The Nifty 50 Index TRI (Total Returns Index) will be used as benchmark for the DSP Nifty 50 Index Fund. Being a multicap index, sectors with major weight on this index are financial services (35%), energy (16%), IT (15%) and consumer goods (11%). As of 28th September 2018, this index has registered returns of 13.20% and 15.18% for the 1 year and 5 year periods respectively. Key equity investments of the DSP Nifty 50 Index fund from DSP MF are expected to include Reliance Industries, HDFC Bank, Infosys, ITC and TCS, which are individual securities featuring the highest weight on the Nifty 50 Index.
DSP Nifty 50 Index Fund will be managed by Gauri Sekaria. Other passively-managed schemes she currently manages include DSP Liquid ETF and DSP Equal Nifty 50 Fund. The absolute returns for the 3 month and 1 month periods of the DSP Equal Nifty 50 Fund were -8.23% and -5.32% as of 12th October 2018. However the fund manager’s role is highly constrained in passive ETFs or mutual funds such as these.