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DSP BlackRock Investment Managers have launched a one-of-its-kind equal-weighted variation of a passive fund on the Nifty 50 index.
The fund caps exposure to Nifty stocks at 2 per cent and sectoral cap of 20 per cent, further diversifies the risks within the index. In the Nifty, the stock weightages are based on market cap, with HDFC accounting for 9.5 per cent and the financial services sector commanding 36 per cent coverage.
The new fund offer will be open for investment between September 29 and October 13.
The fund has slightly changed its investment allocation to the top 50 companies by weighing each stock equally to achieve better stock and sector level diversification, thereby eliminating skew towards a particular stock/sector.
Owing to this methodology, the DSP BlackRock Equal Nifty 50 Fund aims to provide better sector and stock diversification compared to Nifty 50 index. Performance-wise, on total return basis, the Nifty 50 Equal Weight Index has outperformed the Nifty 50 index with an alpha of 2.92 per cent in the last 17 years. The fund will be rebalanced on quarterly basis. Owing to this quarterly rebalancing method, an equal weight portfolio has a built-in profit-booking mechanism, in effect buying the underperformers ‘low’ and selling the outperformers ‘high’.
Kalpen Parekh, President, DSP BlackRock Investment Managers, said, “We have been managing active funds for over two decades and are now complementing the product range with the launch of passive funds.” The AUM of DSP BlackRock MF rose to ₹76,000 crore from ₹58,000 crore with equity funds accounting for ₹26,000 crore. It added ₹8,000 crore in the last nine months.
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