HDFC Nifty 500 Multicap 50:25:25 Index Fund NFO review: Subscription to the New Fund Offer (NFO) of HDFC Mutual Fund’s ‘HDFC Nifty 500 Multicap 50:25:25 Index Fund’ is open till August 20. Subscription to this new index fund opened on August 6. If you are interested in this scheme but have not yet decided whether you should invest in it or not, then the information given here can be useful for you. After knowing the features of this new NFO of HDFC Mutual Fund, it will be easy for you to take any decision in this regard. Investors can start investing in it with a minimum of Rs 100 during this new fund offer and then when the scheme opens again for buying and selling. There is no maximum limit of investment.
What is the specialty of this index fund of HDFC
‘HDFC Nifty 500 Multicap 50:25:25 Index Fund’ is an open-ended mutual fund scheme. The benchmark of this fund is the ‘Nifty500 Multicap 50:25:25 Total Returns Index’, which this new fund will track. That is, the same shares will be included in its portfolio in the same proportion as will be in its benchmark index. Obviously, due to following the benchmark index, this will be a passively managed mutual fund scheme. HDFC Mutual Fund believes that its new scheme is giving investors a convenient and tax-efficient option for wealth creation.
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Benefit of diversification in a single scheme
HDFC Nifty500 Multicap 50:25:25 Index Fund will provide its investors the benefit of diversification in market cap through a single scheme. The portfolio of this fund will consist of only those stocks which are included in the Nifty 500 index. In this, the weightage of largecap will be 50%, while the weightage of midcap and smallcap will be 25-25 percent. Apart from this, the weightage of each segment will be reset once every three months. Due to resetting the weightage on a quarterly basis, the allocation of largecap, midcap and smallcap in the scheme’s portfolio will remain at 50%, 25% and 25% over the long term.
This index fund of HDFC will be the second mutual fund to track the ‘Nifty 500 Multicap 50:25:25 Index’. The first such fund was ‘Navi Nifty 500 Multicap 50:25:25 Index Fund’, which was launched on August 1, 2024.
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For which investors is this scheme right
This scheme of HDFC Mutual Fund can be a better option for those investors who want to achieve capital growth by investing in stocks included in Nifty 500, but while doing so want to adopt a new method for the weightage of each stock in the portfolio. One reason behind doing this can also be that ‘Nifty500 Multicap 50:25:25 TRI’ has historically performed better than ‘Nifty 500 TRI’ during a period of 1, 3, 5 and 10 years, which shows the potential of wealth creation in the long term. For example, Nifty 500 Multicap 50:25:25 TRI has given an average annual return of about 13.9 percent in 10 years, while the average annual return of Nifty 500 in the same period has been 12.4 percent. However, any past return related to the stock market cannot be considered a guarantee of similar performance in the future. This also applies to this fund. Being an equity mutual fund, the market risk is also high in it. Therefore, before deciding to invest, check your risk-taking capacity thoroughly.
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Who is the fund manager of this scheme
The fund managers of this new scheme will be Nirman Morakhia and Arun Agarwal. Morakhia has more than 14 years of experience in equity. He has been associated with HDFC AMC since 2018. Currently, he is managing 20 schemes of the fund house, which does not include fund of funds. Arun Agarwal has more than 23 years of experience in equity, debt and derivative dealing as well as fund management, internal audit and treasury operations. Currently, he manages several funds including HDFC Nifty Realty Index Fund, HDFC Nifty PSU Bank ETF and HDFC BSE 500 Index Fund.
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How much tax will be levied on the earnings
This scheme of HDFC Mutual Fund is an equity mutual fund. The income tax rate applicable on the income earned from this will be decided according to the holding period of the unit. If you sell its units within 1 year of buying them, then Short Term Capital Gains (STCG) tax will be levied on it at the rate of 20 percent. If you sell the units after holding them for a year, there will be no income tax on profit up to Rs 1.25 lakh in a year, while if there is more profit than that, then Long Term Capital Gains (LTCG) tax will have to be paid at the rate of 12.5 percent.
(Disclaimer: The purpose of this article is only to provide information, not to give investment advice. Market fluctuations have a direct impact on the returns of mutual funds. Take any investment decision only after understanding the scheme thoroughly and taking the advice of your investment advisor.)
