ICICI Prudential Mutual Fund has launched the ICICI Prudential Nifty50 Equal Weight Index Fund. The program will invest in constituents of the Nifty50 Equal Weight Index. NFO opens on September 14th and closes on September 28th. Kayzad Eghlim and Nishit Patel will manage the programme.
“As indices perform differently in different market conditions, it is prudent to diversify the index using different weighting methods. Compared to the Nifty50, the Nifty50 equal weight index is less concentrated in the top 5 sectors and therefore outperforms. Also, since the index tries to reduce the influence of large companies on the index performance, there is no size bias,” said Chintan Haria, head of product development and strategy at ICICI Prudential AMC.
According to the fund house, the Nifty50 Equal Weight Index invests in the top 50 stocks in India based on market capitalisation. Empirically, an equal-weight index has a higher dividend yield than a market cap-weighted index because it distributes capital equally among its components. According to the press release, the scheme exhibits smart-beta characteristics because the index has no scale bias. The index’s low concentration helps provide stability to the portfolio.
