{"id":148,"date":"2019-04-15T11:36:15","date_gmt":"2019-04-15T11:36:15","guid":{"rendered":"http:\/\/blog.certifiedfinancialguardian.com\/?p=148"},"modified":"2019-04-16T05:21:48","modified_gmt":"2019-04-16T05:21:48","slug":"indiabulls-nifty50-exchange-traded-fund-should-you-invest","status":"publish","type":"post","link":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/2019\/04\/15\/indiabulls-nifty50-exchange-traded-fund-should-you-invest\/","title":{"rendered":"Indiabulls Nifty50 Exchange Traded Fund: Should You Invest?"},"content":{"rendered":"\n

Indiabulls mutual fund has launched its first passively managed fund<\/a>, Indiabulls Nifty50 Exchange Traded Fund (IN50ETF)<\/p>\n\n\n\n

This exchange-traded fund or ETF will comprise of stocks that replicates the composition of its benchmark, the Nifty 50 index. ETF provides an opportunity to invest across the entire market cap on a real-time basis at lower costs, hence globally they are popular. The key benefit of an ETF over traditional open-ended index funds is liquidity and availability of real-time market price on the stock exchange. They can be bought and sold on the exchange at prices that are usually close to the indicative intra-day Net Asset Value (NAV)<\/a> of the Scheme.<\/p>\n\n\n\n

Plus, an ETF does not require active management. The manager of such a\nfund buys only the stocks of the underlying index and exits a certain stock\nonly when the respective stock exits from the index to be replaced by another\none.<\/p>\n\n\n\n

About\nNifty50 Index:<\/strong><\/p>\n\n\n\n

The Nifty 50 Index is the flagship index of the National Stock Exchange (NSE) comprising of 50 stocks. The Nifty 50 represents approximately about 65% of the total float-adjusted market capitalization and is a true reflection of the Indian stock market. It tracks the behaviour of a portfolio consisting primarily of blue-chip companies<\/a>, the largest and most liquid Indian securities.<\/p>\n\n\n\n

Indiabulls Nifty 50 ETF (IN50ETF) is\nsuitable for those investors who wish to hold a diversified portfolio of\nwell-known companies as represented by Nifty 50 Index and do not mind doing it\nvide a passively managed fund. <\/p>\n\n\n\n

However, given that the Nifty 50 index is a purely equity-based<\/a> index, only investors who have the stomach for high risk and an investment time horizon of at least 5 years, should consider IN50ETF. <\/p>\n\n\n\n

[Read<\/strong>: Why Comparing Returns to Risk Is More Meaningful!<\/a>]<\/p>\n\n\n\n

Table 1: NFO\nDetails<\/em><\/strong><\/p>\n\n\n\n

\n
\n Type<\/strong>\n <\/td>\n An Open-ended Scheme tracking Nifty 50 Index \n <\/td>\n Category<\/strong>\n <\/td>\n Domestic FOF\n <\/td><\/tr>
\n Investment\n Objective<\/strong>\n <\/td>\n To provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error.

\nHowever, there is no guarantee or assurance that the investment objective of the scheme will be achieved.\n\n <\/td><\/tr>
\n Min.\n Investment<\/strong>\n <\/td>\n Rs 5000 and in multiples of Re 1 thereafter\n <\/td>\n Face\n Value<\/strong>\n <\/td>\n Rs\n 10 per unit\n <\/td><\/tr>
\n Entry\n Load<\/strong>\n <\/td>\n Nil\n <\/td>\n Exit\n Load<\/strong>\n <\/td>\n Nil\n <\/td><\/tr>
\n Fund\n Managers<\/strong>\n <\/td>\n Mr Veekesh Gandhi (Senior Fund Manager Equity) and Mr Malay Shah (Head Fixed Income)\n <\/td>\n Benchmark\n Index<\/strong>\n <\/td>\n Nifty 50 Index\n <\/td><\/tr>
\n Issue\n Opens<\/strong>\n <\/td>\n April\n 08, 2019\n <\/td>\n Issue\n Closes:<\/strong>\n <\/td>\n April\n 22, 2019\n <\/td><\/tr><\/tbody><\/table>\n<\/div>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n

How\nwill the scheme allocate its assets?<\/strong><\/p>\n\n\n\n

Under normal circumstances, it is\nanticipated that the asset allocation of the Indiabulls Nifty 50 ETF will be as\nfollows:<\/p>\n\n\n\n

Table 2: Indiabulls\nNifty 50 ETF\u2019s<\/em> Asset Allocation<\/em><\/strong><\/p>\n\n\n\n
\n Instruments<\/strong>\n <\/td>\n Indicative Allocation (% of Total Assets)<\/strong>\n <\/td>\n Risk Profile<\/strong>\n <\/td><\/tr>
<\/td>\n Minimum<\/strong>\n <\/td>\n Maximum<\/strong>\n <\/td><\/td><\/tr><\/thead>
\n Securities covered by Nifty 50 Index\n <\/td>\n 95\n <\/td>\n 100\n <\/td>\n High\n <\/td><\/tr>
\n Money Market Instruments*\/Debt Securities\n including CBLO and Units of Liquid Mutual Fund\n <\/td>\n 0\n <\/td>\n 5\n <\/td>\n Low\n to Medium\n <\/td><\/tr><\/tbody><\/table>\n\n\n\n

*Money Market Instruments will include Commercial Papers, Commercial Bills, Treasury Bills, Government securities having an unexpired maturity up to one year, call or notice money, certificate of deposit, usance bills, and any other like instruments as specified by the Reserve Bank of India from time to time.<\/p>\n\n\n\n

(Source: Scheme Information Document<\/a>)<\/p>\n\n\n\n

What Investment Strategy\nwill the Scheme follow?<\/strong><\/p>\n\n\n\n

As mentioned earlier Indiabulls NIFTY 50\nExchange Traded Fund will be managed passively with investments in stocks in a\nproportion that match as close as possible to the weights of the stocks in\nNifty 50 Index. <\/p>\n\n\n\n

The AMC uses a \u201cpassive\u201d or indexing\napproach to try and achieve the Schemes\u2019 investment objective. Unlike other\nFunds, the Scheme does not try to \u201cbeat\u201d the markets it tracks and does not\nseek temporary defensive positions when markets decline or appear overvalued. <\/p>\n\n\n\n

The AMC does not make any judgments about\nthe investment merit of a particular stock or a particular industry segment or\nthe underlying nor will it attempt to apply any economic, financial or market\nanalysis. <\/p>\n\n\n\n

Indexing eliminates active management risks\nwith regard to over\/ underperformance vis-\u00e0-vis a benchmark. Since the scheme\nis an exchange-traded fund, the scheme will only invest in the security\nconstituting the underlying index. However, Due to corporate action in\ncompanies comprising of the index, the scheme may be allocated\/allotted\nsecurities which are not part of the index.<\/p>\n\n\n\n

The scheme may hold up to 5% of their total\nassets in stocks not included in the corresponding Underlying Index. For\nexample, the AMC may invest in stocks not included in the relevant Underlying\nIndex in order to reflect various corporate actions (such as mergers) and other\nchanges in the relevant Underlying Index (such as reconstitutions, additions,\ndeletions and these holdings will be in anticipation and in the direction of\nimpending changes in the underlying index). These investments which fall\noutside the underlying index due to corporate action shall be rebalanced within\na period of 7 business days.<\/p>\n\n\n\n

Who\nwill manage the Indiabulls Nifty 50 ETF?<\/strong><\/p>\n\n\n\n

The scheme will be managed by Mr Veekesh\nGandhi (Senior Fund Manager Equity) and Mr Malay Shah (Head Fixed Income). <\/p>\n\n\n\n

Mr\nVeekesh Gandhi<\/strong> has completed his M. Com from Mumbai\nUniversity and has an MBA in Finance & Accounting from the University of\nHartford in the USA to his credit. He is well versed with Indian and Global\nMacros and has more than 12 years of experience in the field of Banking and\nCapital markets. He was earlier associated with DSP Merrill Lynch Ltd, SSKI\nSecurities and Motilal Oswal Securities, wherein he was responsible for\ntracking the BFSI sector and research on investment ideas. He is extensively\nresearch oriented and follows a top Down approach for Large Caps and Bottom-Up\napproach for Mid \/ Small Cap.<\/p>\n\n\n\n

Some of the schemes which he manages at the fund house as the lead fund manager and co-fund manager include Indiabulls Blue Chip Fund<\/a>, Indiabulls Arbitrage Fund<\/a>, Indiabulls Value Discovery Fund<\/a>, Indiabulls Savings Income Fund<\/a>, Indiabulls Tax Savings Fund<\/a> and  Indiabulls Equity Hybrid Fund.<\/p>\n\n\n\n

Mr\nMalay Shah<\/strong> is a Commerce Graduate (B. Com) with MMS\ndegree in finance to his credit and has an experience of around 15 years in the\nfield of finance, especially in Debt – Dealing and Fund Management. <\/p>\n\n\n\n

Prior to joining Indiabulls Mutual Fund, he\nwas working as the capacity of Head \u2013 Fixed Income with Peerless Funds\nManagement Co. Ltd, managing all the debt Schemes.<\/p>\n\n\n\n

Mr Malay is the dedicated fund manager for Debt Segment at the Indiabulls Mutual Fund. Some of the schemes which he manages include Indiabulls Arbitrage Fund<\/a>, Indiabulls Value Discovery Fund<\/a>, Indiabulls Savings Income Fund<\/a>, Indiabulls Liquid Fund<\/a>, Indiabulls Ultra Short-Term Fund<\/a>, Indiabulls FMP Series V-1175 days<\/a>, Indiabulls Savings Fund<\/a>, Indiabulls Tax Savings Fund<\/a>, Indiabulls Equity Hybrid Fund and Indiabulls Dynamic Bond Fund<\/a><\/p>\n\n\n\n

What\nis the outlook for Indiabulls Nifty 50 ETF?<\/strong><\/p>\n\n\n\n

Indiabulls Nifty 50 ETF aims to capture long-term returns generated\nthrough passive management by replicating Nifty 50 index. Since it is a\npassively managed fund, the fortune of the fund hinges solely on the\nperformance of the underlying ETF.<\/p>\n\n\n\n

Table\n3: Can they create wealth for you<\/em>?<\/strong><\/p>\n\n\n\n
\n Company’s\n name<\/strong>\n <\/td>\n Weight (%)<\/strong>\n <\/td><\/tr>
\n HDFC Bank\n <\/td>\n 10.67\n <\/td><\/tr>
\n Reliance Industries Ltd.\n <\/td>\n 9.98\n <\/td><\/tr>
\n Housing Development Finance\n Corporation\n <\/td>\n 6.94\n <\/td><\/tr>
\n Infosys Ltd.\n <\/td>\n 6.04\n <\/td><\/tr>
\n ICICI Bank Ltd.\n <\/td>\n 5.52\n <\/td><\/tr>
\n ITC Ltd.\n <\/td>\n 5.45\n <\/td><\/tr>
\n Tata Consultancy Services Ltd.\n <\/td>\n 4.5\n <\/td><\/tr>
\n Kotak Mahindra Bank Ltd.\n <\/td>\n 3.81\n <\/td><\/tr>
\n Larsen & Toubro Ltd.\n <\/td>\n 3.66\n <\/td><\/tr>
\n Axis Bank Ltd.\n <\/td>\n 3.25\n <\/td><\/tr><\/tbody><\/table>\n\n\n\n

(Source: Nifty 50 Index fact sheet<\/a>)<\/p>\n\n\n\n

Although\nthere may be good opportunities, in the long run, the risk also is very high as\nthe Indiabulls Nifty 50 index is skewed heavily towards Equity.  And currently the Indian equity market is\nlikely to hit turbulence and the journey of wealth creation in the near-term\nwould not be smooth as India is under the spell of Lok Sabha Elections that could\nmove the market either way.<\/p>\n\n\n\n

Hence it\nwould be wise to give Indiabulls Nifty 50 ETF a miss and choose an actively\nmanaged fund as the risk involved is better mitigated. But you need to keep in\nmind your preferences especially your financial goal and risk appetite before\ninvesting.<\/p>\n\n\n\n

[Read<\/strong>: Skip NFOs, Instead Consider Building A Strategic Mutual Fund\nPortfolio<\/a>] <\/p>\n","protected":false},"excerpt":{"rendered":"

Indiabulls mutual fund has launched its first passively managed fund, Indiabulls Nifty50 Exchange Traded Fund (IN50ETF) This exchange-traded fund or ETF will comprise of stocks that replicates the composition of its benchmark, the Nifty 50 index. ETF provides an opportunity to invest across the entire market cap on a real-time basis at lower costs, hence…<\/p>\n","protected":false},"author":4,"featured_media":149,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"cybocfi_hide_featured_image":""},"categories":[3],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/148"}],"collection":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/comments?post=148"}],"version-history":[{"count":5,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/148\/revisions"}],"predecessor-version":[{"id":154,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/posts\/148\/revisions\/154"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media\/149"}],"wp:attachment":[{"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/media?parent=148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/categories?post=148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.certifiedfinancialguardian.com\/index.php\/wp-json\/wp\/v2\/tags?post=148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}