Nippon Life India Asset Management has announced a Passive Flexicap Fund of Fund. It is an open-ended fund of funds (FoF) scheme that will be investing in units of ETFs/Index Funds of Nippon India Mutual Fund. The fund would be benchmarked to the Nifty 500 TRI. The new fund offering (NFO) would be close on December 24. The minimum investment required amounts to ₹5,000.
Large-cap, mid-cap, and small-cap are the different parts of the market that perform at several points in time. It is tough to predict which part of the markets would perform well. Hence, investing continuously across market-caps might help to generate potentially high returns over the long run.
As given by CRISIL every month, Nippon India Passive Flexicap FoF would invest across market-caps, based on the average allocation of all active multi-cap funds in the industry into large, mid-and small-cap shares. As a result of this, the fund focus to capture market wisdom along with industry wisdom and try hard to eliminate individual fund manager biases towards market-cap allocation and sector selection. The scheme focuses on a passive investment strategy and would mainly invest in large-cap ETF/ Index Fund, mid-cap ETF, and small-cap ETF.
The underlying shares of the above ETFs / Index Funds are collectively exclusive. Hence, the fund could have investments in 500 shares. However, the real allocation to the above funds could be primarily based on the mutual fund industry’s multi-cap class allocation towards the different market-caps. Investors will endure the recurring cost of the scheme, further to the costs of the underlying scheme. Saugata Chatterjee, Co-Chief Business Officer of Nippon India Mutual Fund stated that the fund would support investors to participate in all sides of the markets by accumulating the market and industry wisdom at a lower cost. The maximum total cost ratio is 1 percent.
Nippon Life India Asset Management Limited is the asset manager for Nippon India Mutual Fund (NIMF). The company was redesigned from Reliance Nippon Life Asset Management Limited to Nippon Life India Asset Management Limited. Then, a renewed certificate of registration was issued by the Registrar of Companies in Mumbai on 13 January 2020.