The primary investment objective of the Nippon India Index Fund – Nifty 50 Plan is to replicate the composition of the Nifty 50 Index, aiming to generate returns commensurate with the performance of the Nifty 50, subject to tracking errors.
The fund employs a passive investment strategy, providing investors with a portfolio that mirrors this leading index of large-cap Indian equities.
The Nippon India Index Fund – Nifty 50 Plan has an average performance among its peers according to CRISIL rankings. This reflects the fund’s ability to match the index’s performance closely but also indicates that it performs similarly to other index funds tracking the Nifty 50.
Nippon India Index Fund Nifty 50 Plan – Returns
Since its inception on September 28, 2010, the Nippon India Index Fund – Nifty 50 Plan has consistently delivered returns aligned with its benchmark, the Nifty 50 TRI. As of April 30, 2024, the NAV stood at ₹37.8794, demonstrating robust growth over various periods:
- 1-Year CAGR: 25.48%
- 3-Year CAGR: 15.89%
- 5-Year CAGR: 14.06%
- Since Inception: 10.29%
When compared to the benchmarks, the fund’s performance is competitive:
- Nifty 50 TRI 1-Year CAGR: 26.27%
- Nifty 50 TRI 3-Year CAGR: 16.92%
- Nifty 50 TRI 5-Year CAGR: 15.30%
- Nifty 50 TRI Since Inception: 11.52%
Additionally, the S&P BSE Sensex TRI, another benchmark, showcases slightly lower but comparable returns:
- S&P BSE Sensex TRI 1-Year CAGR: 23.23%
- S&P BSE Sensex TRI 3-Year CAGR: 16.52%
- S&P BSE Sensex TRI 5-Year CAGR: 15.13%
- S&P BSE Sensex TRI Since Inception: 11.57%
Nippon India Index Fund Nifty 50 Plan – Recent Performance
The latest NAV as of May 31, 2024, is ₹37.8697. The fund has exhibited various levels of performance over different investment horizons:
- 1 Week: -1.76%
- 1 Month: -0.03%
- 3 Months: 2.70%
- 6 Months: 12.15%
- Year-to-Date: 3.92%
- 1 Year: 22.25%
c:moneycontrol
Over the past year, the fund has generated a notable return of 22.25%, reflecting its ability to effectively capture the upside of the large-cap market.
Nippon India Index Fund Nifty 50 Plan – Portfolio Composition and Strategy
The fund maintains a diversified equity portfolio, with 99.98% invested in domestic equities, of which 81.49% are large-cap stocks and 3.24% are mid-cap stocks. The portfolio is composed of 50 stocks, ensuring adequate diversification and alignment with the Nifty 50 Index.
Sector allocation as of April 2024
Key Holdings
The top holdings reflect significant investments in prominent companies:
- HDFC Bank Ltd. – 11.48%
- Reliance Industries Ltd. – 9.96%
- ICICI Bank Ltd. – 8.11%
- Infosys Ltd. – 5.09%
- Larsen & Toubro Ltd. – 4.27%
- Tata Consultancy Services Ltd. – 3.89%
- ITC Limited – 3.88%
- Bharti Airtel Ltd. – 3.45%
- Axis Bank Ltd. – 3.32%
- State Bank of India – 3.18%
These holdings are indicative of a portfolio strategy that focuses on stable, high-performing large-cap stocks, providing investors with exposure to established market leaders.
Nippon India Index Fund Nifty 50 Plan – Risk Ratios
The fund’s risk metrics over the last three years highlight its performance relative to the category average:
- Standard Deviation: 11.86 (Category Avg: 12.36)
- Beta: 0.99 (Category Avg: 0.86)
- Sharpe Ratio: 0.75 (Category Avg: 0.59)
- Treynor’s Ratio: 0.09 (Category Avg: -0.21)
- Jensen’s Alpha: -0.82 (Category Avg: -0.53)
These ratios suggest that while the fund exhibits a low volatility as indicated by the standard deviation, it also provides better risk-adjusted returns, as evidenced by the Sharpe and Treynor ratios. However, the negative Jensen’s Alpha indicates that the fund’s strong returns do not fully account for the risk taken compared to the category average.
Suitability
Its passive investment strategy, designed to replicate the Nifty 50 Index, offers a cost-effective way to gain exposure to the top 50 companies in the Indian market.
Given its historical performance and alignment with the benchmark, this fund is ideal for investors with a long-term investment horizon looking for stable returns with relatively low risk.
Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be considered as investment advice or a recommendation to invest in any particular mutual fund or asset class. Past performance does not indicate future results, and investors should research and consult with a financial advisor before making investment decisions. Investing in mutual funds involves risks, including the possible loss of principal invested.
