SBI Mutual Fund Launches Nifty50 Equal Weight ETF, NFO to Open on July 8

SBI Mutual Fund has announced the launch of SBI Nifty50 Equal Weight Exchange Traded Fund (ETF). The programme will track the Nifty50 Equal Weight index, which is based on an equal weighting approach. This is different from the Nifty50 index, which is based on market capitalisation.

NFO Details

The New Fund Offer (NFO) will be available from July 8 to July 12, 2024. The minimum investment amount is Rs 5,000 in multiples of Rs 1. The units under the scheme will be listed on the NSE and BSE and can be bought and/or sold on all trading days.

Also read: Budget 2024: Mutual fund industry calls for tax incentives

Investment objective

According to SBI Mutual Fund, the stocks in the Nifty50 Equal Weight index are the same as those in the Nifty50, with all stocks given equal weighting. This is an approach that would go a long way in enabling the index to denote broad exposure to the growth potential of the country’s leading companies, rather than focusing on a few heavyweight stocks or sectors.

The index will be allocated equally across the top 50 companies in India and will provide broad growth potential across stocks and sectors.

As SBI Mutual Fund said in a statement, the investment objective of the SBI Nifty50 Equal Weight ETF is to generate returns that are closely in line with the total returns of the underlying index, subject to tracking error.

Mutual fund SBI further said that the scheme will invest 95-100 per cent in securities forming part of the NIFTY50 Equal Weight Index TRI and the remaining in government securities (G-secs), state development loans (SDL), treasury bills including tri-party repo and units of liquid mutual funds.

According to SBI Mutual Fund, the product is suitable for investors who are looking for long-term capital growth and want to invest in securities that come under the Nifty50 Equal Weight Index. By investing in the Nifty50 Equal Weight Index, investors will have the opportunity to invest in an alternative weighted index to the Nifty 50.

It further said that the Nifty50 Equal Weight Index has several advantages over conventional cap-weighted indices. It will have less influence from large-cap stocks and provide broader exposure across sectors and industries in the equity market.