DSP BlackRock Mutual Fund Investment Managers, one of India’s leading asset management companies, has introduced the DSP BlackRock Nifty 50 Fund, according to an Economic Times (ET) report. This is the first passively managed fund introduced by the AMC and would feature investments with equal-weightage variation of the Nifty 50 Index.
The new scheme would be available through direct and regular plans as well as in the dividend and growth option variants. The ET report also stated that the DSP BlackRock Nifty 50 Fund would feature the same companies as those on the Nifty 50 Index however the scheme would assign equal weight to all its equity investments similar to the Nifty 50 Equal Weight Index.
The DSP BlackRock Nifty 50 Fund would attempt to provide investors with superior stock and sector diversification as compared to the Nifty 50 Index. The ET report further states that historic data recorded between 30th June 1999 and 31st July 2017 shows the Nifty 50 Equal Weight Index has performed better than the Nifty 50 Index. The Nifty 50 Equal Weight Index gets rebalanced at the end of every quarter, which allows for profit booking automatically and this same benefit would be exploited by the scheme to generate superior returns.
In practice this rebalancing mechanism allows purchase of underperformers at low levels and sale of outperformers at high levels, which is the basis of booking high profits. According to an AMC spokesperson, this new scheme is expected to be ideal for investors seeking the twin benefit of diversification across sectors and companies along with an opportunity to invest in India’s top listed companies.