Index Funds are a simple solution for investors; it offers well-diversified portfolio, reduces your time and efforts to track and review the benchmark index, adds good performers and eliminates bad performers on every rebalance.

Investors looking beyond the large-cap stocks universe, seeking an exposure to large and mid-cap stock indices, without worrying about issues such as how much to allocate and how to rebalance, should consider investment in Index funds that track and review the large and mid-cap space. Additionally, if you want to diversify away from a concentrated portfolio of large caps, you could consider opportunities in midcaps.

Investment in an index fund that tracks large and mid-cap stocks offers the benefit of stability in your portfolio through large-cap stocks and optimal returns with the growth potential of midcap stocks. This sets the satellite portion of your portfolio comprising with large and mid-cap stocks and ensures a balance allocation to generate risk-adjusted returns.

Edelweiss Mutual Fund has launched Edelweiss Large & Midcap Index Fund, an open-ended Equity Scheme replicating Nifty Large Midcap 250 Index.

On the launch of this fund, Ms Radhika Gupta, MD and CEO of Edelweiss Asset Management Limited pointed out that, “Index funds are gaining popularity due to the simplicity of the product. It is uncomplicated as it is easy to track and don’t need frequent reviews. This product is based on very unique Nifty LargeMidcap 250 index which balances its exposure to large caps and mid caps in one portfolio. Complementing active funds in one’s portfolio, the fund is an apt solution for do-it-yourself (DIY) and first-time investors for their core investment allocation. This fund is likely to create enduring value in the long run for investors.”

Table 1: Details Edelweiss Large & Midcap Index Fund

Type An Open-ended Equity Scheme replicating Nifty Large Midcap 250 Index. Category Index Fund
Investment Objective The investment objective of the scheme is to provide returns before expenses that closely correspond to the total returns of the Nifty Large Midcap 250 Index subject to tracking errors. However, there is no assurance that the investment objective of the Scheme will be realized and the Scheme does not assure or guarantee any returns.
Min. Investment Rs 5,000 and in multiples of Re 1/- thereafter. Additional Purchase Rs. 500/- and in multiples of Rs. 1 thereafter. Face Value Rs 10/- per unit
  • Direct
  • Regular
  • Growth
  • Income Distribution cum Capital Withdrawal option
Entry Load Not Applicable Exit Load Nil
Fund Manager Mr Bhavesh Jain Benchmark Index NIFTY LargeMidcap 250 Total Return Index
Issue Opens November 15, 2021 Issue Closes November 26, 2021

(Source: Scheme Information Document

The investment strategy for Edelweiss Large & Midcap Index Fund will be as follows:

Edelweiss Large & Midcap Index Fund will predominantly invest not less than 95% of its corpus in stocks comprising of the underlying index – Nifty LargeMidcap 250 Index with the objective to provide investment returns that, before expenses, closely corresponds to the returns equivalent to the index, subject to tracking errors.

The scheme being an Index fund will follow a passive investment strategy; it will invest in stocks constituting the respective benchmark index and endeavour to maintain a low tracking error.

The underlying index provides exposure to large and mid-cap stocks in one portfolio and aims to maintain a balance between stability through large caps and growth via mid caps.

About the benchmark

The NIFTY LargeMidcap 250 reflects the performance of a portfolio of 100 large cap and 150 mid cap companies, represented through the NIFTY 100 and the Nifty Midcap 150 index respectively. The Index provides equal weight allocation to large-cap and mid-cap stocks, which is reset quarterly. Weights to individual stocks are assigned as per their free-float market cap.

Index constituents are reviewed on half-yearly basis. Through equal weight, the index fund seeks to balance between growth (mid-cap) and stability (large-cap), which cannot be achieved if weighed on the basis of market capitalization, due to it being skewed towards large-cap stocks.

The following list is top constituents and sector by their weightage under the index as on September 30, 2021:



(Source: Scheme Information Document

Under normal circumstances, the asset allocation will be as under:

Table 2: Asset Allocation for Edelweiss Large & Midcap Index Fund

Instruments Indicative Allocation (% of net assets) Risk Profile
Minimum Maximum High/Medium/Low
Equity and equity related securities constituting the Nifty LargeMidcap 250 Index 95 100 High
Debt and Money Market Instruments 0 5 Low to Medium

(Source: Scheme Information Document

Who will manage Edelweiss Large & Midcap Index Fund?

Mr Bhavesh Jain will be the dedicated fund manager for this scheme.

Mr Bhavesh Jain is Fund Manager at Edelweiss Asset Management Ltd. He has a total work experience of over 12 years in the equity market segment and his qualification includes Masters in Management Studies (Finance) from the Mumbai University. Prior to this, he was associated with Edelweiss Securities Limited as SGX Nifty Arbitrage Trader.

The other schemes Mr Jain manages are Edelweiss Arbitrage Fund (Equity Portion), Edelweiss Balanced Advantage FundEdelweiss Recently Listed IPO FundEdelweiss Equity Savings Fund (Equity Portion), Edelweiss Aggressive Hybrid Fund (Equity Portion), Edelweiss Large Cap FundEdelweiss Greater China Equity Off-Shore FundEdelweiss Emerging Markets Opportunities Equity Offshore FundEdelweiss Asean Equity OffShore FundEdelweiss Europe Dynamic Equity Off-Shore FundEdelweiss US Value Equity Off-shore FundEdelweiss US Technology Equity Fund of FundEdelweiss ETF – Nifty BankEdelweiss Nifty 50 Index Fund, and Edelweiss Nifty 100 Quality 30 Index Fund.

Fund Outlook – Edelweiss Large & Midcap Index Fund

Edelweiss Large & Midcap Index Fund provides equal exposure to large and mid-cap stocks in one portfolio and it is the first index fund to be launched on Nifty LargeMidcap 250 Index. The scheme aims to invest in securities comprising the underlying index and generate returns corresponding to the index.

The scheme is a simple yet powerful index fund if you wish to invest in the large and mid-cap universe. It offers equal weight to Large-caps and mid-caps stocks and reduces the bias to any one market cap segment.

The scheme will aim to invest in the portfolio of 100 largecap & 150 midcap companies with the potential to deliver promising returns. Investors may benefit from the scheme, as it reduce concentration to single market cap segment, since the Index provides equal weight allocation to large cap & midcap stocks.

Being an index fund, the scheme will follow a passive investing strategy that helps maintain a lower expense ratio than actively managed funds. Though the index has the stability of large cap stocks, it simultaneously holds equal weightage towards midcap stocks which are highly volatile in turbulent market conditions.

Hence, this makes the scheme a risky investment proposition and it is suitable only for investors who can stomach high risk and have a long investment horizon of at least 5-7 years to sustain the market volatility.

This article first appeared on PersonalFN here

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