Aditya Birla Sun Life AMC Limited, a subsidiary of Aditya Birla Capital Limited (a significant non-bank financial services’ conglomerate), and investment manager to Aditya Birla Sun Life Mutual Fund (ABSLMF) has announced the launch of Aditya Birla Sun Life Nifty Next 50 Index Fund, an open ended scheme that will track the Nifty Next 50 Index. The New Fund Offer (NFO) opens for subscription on January 31, 2022, and closes on February 14, 2022.
The objective of the scheme is to provide returns that closely track the total returns of securities as represented by Nifty Next 50 Index, subject to tracking errors. Through this, the aim is to provide returns that closely track the total returns provided by the benchmark index, subject to tracking errors. The scheme is suitable for investors seeking long-term capital growth. Since this is an index fund, investors do not need a Demat account to invest in the index and can avail both Systematic Investment Plan (SIP) and lumpsum route.
Launched in 1996, the Nifty Next 50 Index is computed using free float market capitalization method and is re-balanced on a semi-annual basis. It represents the 50 companies from Nifty 100, after excluding the Nifty 50 companies. Simply put, these have the potential to become bluechips, as they currently sit at the sweet spot between bluechip large caps (Nifty 50 Index) and high growth mid-caps (Nifty Midcap 150 Index). In fact, of 75 stocks included in the Nifty 50 Index from January 2002 to March 2021, 51 stocks have been graduated from the Nifty Next 50 Index.
Additionally, Nifty Next 50 is a well-diversified index with better sectoral as well as sub-sectoral diversification. As on 15th Jan 2022, consumer and commodities sector constitute 25.6% and 20.1% respectively, followed by Financial Services with 20%. In comparison, financial services (36.3%) and IT (18.5%) alone account for 55% of the Nifty 50 Index, showcasing higher concentration.
Commenting on the launch, Mr. A. Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC Limited said, “Large caps offer stability, liquidity, better price discovery and high corporate governance. Especially during volatile times, large caps are a must-have in an investor’s portfolio. And with a pre-dominantly large cap exposure, lower concentration and better sub-sectoral representation, Nifty Next 50 Index Fund provides investors an ideal way to invest in the potential future bluechips.”
He adds, “The Nifty Next 50 Index has consistently given better 3-year rolling returns than Nifty 50 Index. From 2002 till date, the Nifty Next 50 Index has given a CAGR of 21.8% p.a., significantly higher than Nifty 50 Index’s CAGR of 18.2% p.a. in the same period. Aditya Birla Sun Life Nifty Next 50 Index Fund thus offers investors an opportunity to enjoy better risk-adjusted returns at a low cost.”
At present, the Nifty 50 Index has exposure to just 13 sectors, while the Nifty Next 50 Index has an exposure to 17 sectors as per data on NSE as on December 31, 2021. These include IT, construction, oil & gas and healthcare, to name a few. On an average, the approximate free float market capitalization of each company in the Nifty Next 50 Index is Rs 25,800 crore. Courtesy the well-diversified index, the Aditya Birla Sun Life Nifty Next 50 Index Fund eliminates risk pertaining to a particular sector. That, coupled with the ease of investing and low cost due to passive management makes this scheme an ideal choice for investors seeking long term capital appreciation. The minimum application amount for this fund is Rs 100 and in multiples of Re 1 thereafter, during the NFO.
The product labelling assigned during the NFO is based on internal assessment of the Scheme characteristics or model portfolio and the same may vary post NFO when the actual investments are made.
Mutual Fund investments are subject to market risks, read all scheme related documents carefully.