Baroda BNP Paribas has launched Nifty 50 Index Fund NFO (New Fund Offer). As the name suggests, Baroda BNP Paribas Nifty 50 Index Fund invests in stocks that are part of the Nifty 50 Index. The index has delivered an annualized return of 11% over the past 25 years since its inception. Investors generally prefer index funds, but it’s important to consider these as long-term investments. Should I invest in Baroda BNP Paribas Nifty 50 Index Fund NFO? What are the risk factors associated with this mutual fund?
Baroda BNP Paribas Nifty 50 Index Fund NFO Stock Details
It is an open-ended index fund that replicates/tracks the Nifty 50 index. Click here for details on NFO.
| Fund name | Baroda BNP Paribas Nifty 50 Index Fund |
| NFO is open | January 8, 24 |
| NFO closing | January 22, 24 |
| Scheme re-opened for continued purchase/sale | Within 5 business days |
| Minimum application amount | 5,000 rupees, thereafter in multiples of 1 rupee |
| Minimum SIP | 500 rupees for 6 months |
| Fund NAV | 10 rupees during NFO period. |
| entry road | Nothing |
| End of loading | 0.2% on exchanges within 30 days |
| scheme category | large cap fund |
| danger | very high risk |
| standard | nifty 50 try |
| fund manager | Neeraj Saxena |
Baroda BNP Paribas Nifty 50 Index Fund NFO SID
What is the investment objective of Baroda BNP Paribas Nifty 50 Index Fund?
The scheme’s investment objective is to provide an investment return approximately equal to the total return of the securities represented by the Nifty 50 Total Return Index before expenditure, subject to tracking errors, fees and expenses.
However, there is no guarantee that the objectives of the Scheme will be realized and the Scheme does not guarantee or guarantee any returns.
What is the allocation pattern of this index fund?
Here’s how to invest in index funds:
| Type of instrument | minimum% | maximum% | risk profile |
|---|---|---|---|
| Stocks and stock-related securities of Nifty 50 index companies | 95% | 100% | expensive |
| Units of money market instruments and liquidity schemes, cash and cash equivalents. | 0% | Five% | low to medium |
What does Nifty 50 Index include?
The NIFTY 50 index is a well-diversified index of 50 companies that reflects the overall market situation. NIFTY 50 index is calculated using free float market capitalization method.
NIFTY 50 can be used for various purposes such as benchmarking fund portfolios, launching index funds, ETFs, and structured products. Below is the current list of sectors, their weightings in this index, and top constituents.
Why invest in Baroda BNP Paribas Nifty 50 Index Fund NFO?
Here are some reasons to invest in index funds like this.
- Diverse portfolio: The fund invests in the Nifty 50 index, which comprises a diversified portfolio of equities. This greatly contributes to portfolio diversification.
- Stable income: The Nifty 50 index has delivered stable returns, with a track record of 14% per annum over the past five years and 11% per annum since its inception.
- Long term performance: If you are concerned about the long-term performance of large-cap or flexi-cap funds, Baroda BNP Paribas Nifty 50 Index Fund is a promising option. Historical data shows strong long-term performance of such indices.
Important risk factors to consider before investing in such funds
You should consider some of these risk factors/negative factors before investing.
- Stock-like properties: This index fund invests in 50 stocks and is similar to investing directly in stocks. Investing in certain stocks is generally considered to be risky.
- Debt instrument exposure: The Fund allocates up to 5% to fixed income instruments, which are subject to interest rate risk, credit risk, and liquidity risk.
- Limited returns: There is a cap on the return of this index fund. The annualized return over the past five years has been 14%, but this is largely due to the recent bull runs in 2020 and 2023, which may not happen often. Otherwise, the return could be even lower, around 10% to 11%.
- Investors should read the SID/KIM/Prospectus before investing in such mutual funds.
How has the Nifty 50 index performed in the past?
Now let’s take a look at the performance of the underlying index in which this fund invests. Gross profit includes dividends, interest, and rights to shareholders (if any).
Should you invest in Baroda BNP Paribas Nifty 50 Index Fund NFO?
Baroda BNP Paribas Nifty 50 Index Fund invests in Nifty 50 Index stocks. The index has produced consistent returns, returning 11% annually since its inception and 14% annually over the past five years.
This mutual fund scheme may be suitable for high-risk investors with an investment horizon of 5-10 years.
On the other hand, low-risk investors or short-term investors may choose to avoid such investments.
Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. I have been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.
