Aditya Birla Sun Life Mutual Fund Launches Nifty Next 50 Index Fund

According to the Asset Management Company (AMC), the objective of the scheme is to provide returns that closely tracks the total returns of securities represented by the Nifty Next 50 Index.

Since it is an index fund, investors do not need a demat account to invest in the index and can avail both the Systematic Investment Plan (SIP) and the lump sum route.

Launched in 1996, the Nifty Next 50 Index represents 50 companies of the Nifty 100, excluding the top 50 companies of the Nifty. Experts believe that these have the potential to become bluechips. In fact, from January 2002 to March 2021, out of 75 stocks included in the Nifty 50 index, 51 stocks have been graduated from the Nifty Next 50 index.

Also, Nifty Next 50 is a well diversified index with better sectoral as well as sub-sectoral diversification.

As of January 15, the consumer and goods sectors account for 25.6% and 20.1%, respectively, followed by financial services at 20%. In comparison, financial services (36.3%) and IT (18.5%) alone account for 55% of the Nifty 50 index, showing a higher concentration.

Commenting on the launch, A Balasubramaniam, Managing Director and CEO, Aditya Birla Sun Life AMC said, “Large-caps provide stability, liquidity, better price discovery and higher corporate governance. Especially during volatile times, it is important to have large caps in an investor’s portfolio. And with pre-dominantly large cap exposure, low concentration and superior sub-sector representation, Nifty Next 50 Index Fund offers investors an ideal way to invest in potential future blue chips.”

Since 2002 till date, the Nifty Next 50 Index has given returns at a CAGR of 21.8%, which is higher than the Nifty 50 Index’s CAGR of 18.2% in the same period.

As per the National Stock Exchange data as on December 31, the Nifty 50 index has exposure to only 13 sectors, while the Nifty Next 50 index has exposure to 17 sectors. These include IT, construction, oil and gas and healthcare, to name a few.

The minimum application amount for this fund is 100 and in multiples of Rs 1, thereafter, during the NFO period.