Publish Date:
HDFC Mutual Fund has launched an open-ended equity index scheme - HDFC NIFTY50 Equal Weight Index Fund.
The scheme will be replicating/tracking NIFTY 50 Equal Weight Index (TRI).
The investment objective of HDFC NIFTY50 Equal Weight Index Fund is to generate returns that are commensurate (before fees and expenses) with the performance of the NIFTY50 Equal Weight Index TRI (Underlying Index), subject to tracking error. There is no assurance that the investment objective of the Scheme will be realized.
HDFC NIFTY50 Equal Weight Index Fund is mandated to invest 95% to 100% of its total assets in Securities covered by NIFTY50 Equal Weight Index. The scheme may also hold 0% to 5% of its assets in Debt Securities and Money Market Instruments.
Accordingly, HDFC NIFTY50 Equal Weight Index Fund would invest in Securities which are constituents of NIFTY50 Equal Weight Index and endeavor to track the Underlying Index. It may also invest in Stock futures/index futures and such other permitted derivative instruments only for hedging and portfolio balancing.
Further, due to corporate action in companies comprising of the index, the scheme may be allocated/allotted securities which are not part of the index. For example, the Fund may invest in stocks not included in the relevant Underlying Index in order to reflect various corporate actions (such as mergers) and other changes in the relevant Underlying Index (such as reconstitutions, additions, deletions and these holdings will be in anticipation and in the direction of impending changes in the Underlying Index.
As per the Scheme Information Document, the HDFC NIFTY50 Equal Weight Index Fund will be managed passively with investments in stocks comprising the underlying index subject to tracking error.
The investment strategy would revolve around reducing the tracking error to the least possible through regular rebalancing of the portfolio, taking into account the change in weights of stocks in the Index as well as the incremental collections/redemptions in the Scheme.
A part of HDFC NIFTY50 Equal Weight Index Fund’s portfolio may be invested in debt and money market instruments, to meet the liquidity requirements.
Since the Scheme is index fund, it will only invest in securities constituting the Underlying Index. However, due to corporate action in companies comprising the index, the Scheme may be allocated/allotted securities which are not part of the index. Such holdings would be rebalanced within 7 Business Days from the date of allotment/listing of such securities.
As part of the Fund Management process, HDFC NIFTY50 Equal Weight Index Fund may use derivative instruments such as index futures and options, or any other derivative instruments that are permissible or may be permissible in future under applicable regulations. However, trading in derivatives by the Scheme shall be for restricted purposes as permitted by the regulations.
Subject to the Regulations and the applicable guidelines, HDFC NIFTY50 Equal Weight Index Fund may engage in Stock Lending activities. The Scheme may also invest in the schemes of Mutual Funds in terms of the prevailing SEBI (MF) Regulations.
HDFC NIFTY50 Equal Weight Index Fund’s performance will be benchmarked against NIFTY50 Equal Weight Total Return Index (TRI).
The fund will be managed by Mr Krishan Kumar Daga.
The NFO opens for subscription on August 04, 2021, and closes on August 13, 2021. The scheme will reopen for continuous sale and repurchase within 5 business days from the date of allotment of units under NFO.
The minimum subscription amount is Rs 5,000 and in multiples of Re 1 thereafter.
The fund offers Regular Plan and Direct Plan. Each plan offers Growth Option only.