Mumbai / Chennai, September 2017: DSP BlackRock Investment Managers Pvt. Ltd., one of India’s premier asset management companies, todaylaunched the DSP BlackRock Equal Nifty 50 Fund, its first scheme in the passive funds category. The DSP BlackRock Equal Nifty 50 Fund is an equal-weighted variation of the Nifty 50 index with the same constituent set of companies. The difference being that the former assigns equal weight to each stock and invests equally in them whereas in the latter, the weight of each constituent is apportioned according to their market capitalization.
The core investment principle for this fund is to invest in blue chip benchmark companies that are leaders in their sectors, large in size and can ride through business cycles. While retaining this core principle, the fund slightly changes its investment allocation in India’s top 50 companies, by weighing each stock equally to achieve better stock and sector level diversification thereby eliminating skew towards a particular stock or sector.
The DSP BlackRock Equal Nifty 50 Fund, owing to its methodology, aims to provide better sector and stock diversification compared to Nifty 50 Index. Performance wise, on a total return basis, the Nifty 50 Equal Weight Index has outperformed the Nifty 50 Index with an alpha of 2.92% (returns since 30th June 1999 to 31st July 2017). The Equal Weight Index gets rebalanced on a quarterly basis. Owing to this quarterly rebalancing method, an equal weight portfolio has a built-in profit booking mechanism, in effect buying the underperformers at “low” and selling the outperformers at “high”. The scheme is available in both regular and direct plans with both options of Growth and Dividend. The New Fund Offer opens on September 29, 2017 and will close on October 13, 2017.
Gauri Sekaria, Vice President, ETF and Passive Investments at DSP BlackRock Investment Managers Pvt. Ltd, is the fund manager for this fund. Gauri has over 12 years of experience in management of ETFs and Index Funds.
Kalpen Parekh, President, DSP BlackRock Investment Managers Pvt. Ltd said, “We are excited to launch our first passive fund through an interesting smart beta concept of equal weight portfolio. We have successfully been managing active funds for over two decades and are now complementing our product range via launch of passive funds. The market too is maturing with current AUM of Rs 65,000 crore in ETFs and passive funds since EPFO & PFs started investing in 2014.”
Anil Ghelani, CFA, Senior Vice President, DSP BlackRock Investment Managers Pvt. Ltd said, “The DSP BlackRock Equal Nifty 50 Fund is an attractive option for an individual or HNI investors to gain access to a portfolio which meets the two basic principles of investing in leaders and diversification across companies and sectors, a smart strategy which has potential to outperform market-cap indices as seen in the past. Equal weighting creates a different set of risk exposures and return potential when compared to market cap weighting and hence it offers good diversification for sophisticated institutional investors like corporate treasury or an exempt PF trust.”
Reasons to invest in DSP BlackRock Equal Nifty 50 Fund (in a nutshell):
- Large Cap exposure: The fund provides pure large-cap exposure by investing in the top 50 companies in the country
- Equal weight: Equal weight on all constituents of the index, eliminates bias due to larger free float market cap
- Diversification: Broad portfolio with diversification across stock and sectors
- Cost effective: Exposure to diversified portfolio of large-cap stocks at a low cost
- No selection bias: Fund manager has no stock or sector bias