Edelweiss Asset Management Ltd announced the launch of an open-ended equity scheme that replicates Nifty LargeMidcap 250 Index. This is the first index fund to be launched on Nifty LargeMidcap 250 Index, which provides equal exposure to large- and mid-cap stocks in one portfolio, according to the fund house.
The index will allocate to the 100 large-cap stocks, represented by established companies in the Nifty 100 Index and 150 mid-cap stocks, represented by emerging and high growth companies in the Nifty midcap 150 Index.
The asset management in a note acknowledged that the scheme may generate low to negative returns in the short term, meaning that investors may have to remain invested for five-seven years to gain meaningful returns.
Additionally, the asset management company believes that the equal weight to large-caps and mid-caps reduces skew to any one market cap segment and provides meaningful exposure to promising mid-cap stocks.
“Index funds are gaining popularity, more so due to simplicity of the product. They are easy to track and don’t need frequent reviews. This product is based on very unique Nifty Large Midcap 250 Index which balances its exposure to large-caps and mid-caps in one portfolio,” said Radhika Gupta, managing director and chief executive officer, Edelweiss Asset Management.
“Complementing active funds in one’s portfolio, the fund is an apt solution for do-it-yourself (DIY) and first-time investors for their core investment allocation. This fund is likely to create enduring value in the long run for Investors,” she added.