SBI Mutual Fund today announced the launch of the SBI Nifty Next 50 Index Fund, an open-ended index scheme. The mutual fund company claims that the fund would replicate the performance of the Nifty Next 50 Index, efficiently with relatively lower costs.
The investment objective of the scheme is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error. According to experts, the new scheme would be suitable for investors who are seeking long term capital appreciation, investment in securities covered by the Nifty Next 50 Index and gain access to the growth of potential market leaders.
The company says the scheme would invest a minimum of 95 per cent and a maximum of 100 per cent investment in securities covered by Nifty Next 50 Index with up to 5 per cent in Money Market instruments including commercial papers, Government securities, commercial bills, treasury bills, triparty repo, 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 and units of the liquid mutual fund.
The minimum application amount required is Rs 5,000 and in multiples of Re 1 thereafter. Investments can also be done through daily, weekly, monthly, quarterly, semi-annual and annual SIP.
Vinay M. Tonse, MD and CEO, SBI Mutual Fund says “As a fund house, we have built a strong franchise in the passive investment space, in addition to our actively managed funds. SBI Nifty Next 50 Index Fund is a good opportunity for those who want to take advantage of the merits of passive investing and at the same time benefit from the growth potential of future market leaders which comprise the underlying index.”
This open-ended index scheme would track the 24-year-old Nifty Next 50 Index. Nifty Next 50 index’s return since inception stood at 15.56 CAGR (as of March 31, 2021).
D P Singh, Chief Business Officer, SBI Mutual Fund says “SBI Nifty Next 50 Index Fund is our second index fund offering in addition to our existing SBI Nifty Index Fund and other passive offerings in the ETF category. We will continue to expand our offerings to customers helping them choose their investments as per their goals.”
NIFTY Next 50 was launched on December 24, 1996, with a base date of November 4, 1996, and a base value of 1,000 points, which represented 50 companies from Nifty 100 after excluding the constituents of Nifty 50. The index is well-diversified across sectors with less concentrated exposure to any one sector. The Nifty Next 50 Index is rebalanced on a semi-annual basis.