DSP Nifty 50 Equal Weight Index Fund

DSP Nifty 50 Equal Weight Index Fund. Who should invest?

One of the largest AMCs in India, DSP has been helping investors make sound investment decisions responsibly and unemotionally for over 25 years.

DSP is backed by the DSP Group, an almost 160-year-old Indian financial giant. The family behind DSP has been very influential in the growth and professionalization of capital markets and the money management business in India over the last one-and-a-half centuries.

Let us talk about the flagship product – DSP Nifty 50 Equal Weight Index Fund.

About DSP Nifty 50 Equal Weight Index Fund 

– Investment objective

The primary investment objective of the Scheme is to invest in companies that are constituents of the NIFTY 50 Equal Weight Index (underlying Index) in the same proportion as in the index and seeks to generate returns that are commensurate (before fees and expenses) with the performance of the underlying Index, “subject to tracking error”. 

– Investment process  

By matching the Nifty 50 Equal Weight TR Index, it allows you to invest in India’s top 50 companies, each with the same weight in the portfolio. The portfolio is re-aligned every quarter so every stock’s weight is brought back to 2%. 

– Portfolio composition 

The portfolio has an entire equity exposure of 100% in large-cap companies. The top 5 sectors hold nearly 48% of the portfolio, with major exposure to the banking and automobiles sector.

DSP-nifty-50-equal-weight-index-fund-portfolio-composition
Note: Data as of 30th Sep 2022. The bar graph shows the top 5 sector weightage of the fund’s portfolio. 
Source: dspim.com

Top 5 holdings

Name Sector Weightage % 
Axis Bank Ltd. Bank 2.34 
Coal India Ltd.  Coal Mining company 2.19 
Sun Pharmaceutical Industries Ltd. Pharmaceutical 2.16 
HCL Technologies Technology 2.16 
Power Grid Corporation of India Ltd.  Electric Services 2.12 
Note: Data as of 30th Sep 2022. 
Source: ICICI Pru AMC

Performance over 5 years 

If you would have invested 10,000 at the inception of the fund, it would be now valued at Rs. 16,625. This fund has outperformed the benchmark in all time horizons.

DSP-nifty-50-equal-weight-index-fund-performance-over-5-years
Note: Performance of the fund since launch as on Nov 11, 2022. 
Source: Moneycontrol 

The fund has given consistent returns and has outperformed the benchmark over the period of more than 5 years by generating a CAGR (Compounded Annual Growth Rate) of 10.58%.

Fund managers 

  • Anil Ghelani – Total work experience of 22 years. Managing the scheme since June 2019. He was also the CIO of DSP Mutual Fund. 
  • Diipesh Shah – Total work experience of 20 years. Managing the scheme since November 2020. 

Who should invest in DSP Nifty 50 Equal Weight Index Fund? 

Investors 

  • Aiming to build wealth by investing conveniently & equally in the top 50 Indian companies. 
  • Have the patience & mental resilience to remain invested for a decade or more. 

Why invest in DSP Nifty 50 Equal Weight Index Fund? 

  • Can help you beat the impact of rising prices over the long term. 
  • Well diversified portfolio, avoids undue concentration in a few stocks/sectors. 

Horizon 

  • One should look at investing for a minimum of 5 years or more. 
  • Investment through a Systematic Investment Plan (SIP) may help in tackling the volatility of the broader equity market. 
Conclusion 

This is a zero-bias product since it only replicates an index and does not carry any stock or sector bias & does not have an ‘active’ fund manager.

Relatively low-cost, with a comparatively lower expense ratio than active large-cap funds. It offers a well-diversified portfolio and avoids undue concentration in a few stocks/sectors.

Disclaimer

This is not recommendation advice. All information in this blog is for educational purposes only.

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