Invest in Top 10 Indian Companies with Equal Weight Index Fund: Mutual Funds New Launch!
India’s 10th biggest asset management company, DSP Mutual Fund has launched the country’s first mutual fund scheme based on the Nifty Top 10 Equal Weight Index. However, it offers lucrative profitable investment opportunities by tracking the top 10 Indian companies of the Nifty 50 index with equal weightages.
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Features of Equal Weight Index Fund
- Equal Weightage: Each stock in the index is equally weighted, as it ensures a balanced portfolio.
- Lowest Number of Stocks: Among diversified equity-oriented funds, DSP Nifty Top 10 Equal Weight Funds have the lowest number of stocks.
- Top 10 Stocks: It actually tracks the performance of only the top 10 selected good-performing stocks from the Nifty 50.
Benefits
- Relatively Better Valuations: The predominant aim of the funds is to provide lucrative returns on the investment those 10 stocks are selected on the basis of six-month average free-float market capitalization.
- Diversification: The fund offers diversification across five sectors: Financial Services, Information Technology, Fast Moving Consumer Goods, Construction, and Consumable Fuels.
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Things to Consider about Equal Weight Index Fund
- Narrow Investable Universe: In Nifty 50, India’s biggest good-performing companies are included, selecting 10 stocks from them may lead to missed opportunities in broader markets.
- Correlation with Nifty 50: Be careful, these funds have a correlation with NIFTY 50 so it can impact its performance as there are numerous ups and downs in the market.
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Investor Takeaway
The DSP Nifty Top 10 Equal Weight Index Fund provides lucrative investment opportunities and profit margins. On the contrary, it also contains challenges, some risks, and limitations to be considered. If you are looking to invest in these funds then you should consider your investment goals and risk tolerance first.
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