Navi Mutual Fund launched ELSS Tax Saver Nifty 50 Index Fund NFO. As the name suggests, this fund invests in stocks that are part of his Nifty 50 Index and is also tax efficient. The index has delivered an annualized return of 11% over the past five years.should i invest Navi ELSS Tax Saving Nifty 50 Index Fund NFO? What are the risk factors for this mutual fund?
Also read: ValueResearch Top Rated Mutual Funds in 2023
Navi ELSS Tax Saver Nifty 50 Index Fund – NFO Issue Details
This is an open-ended index fund that replicates/tracks the Nifty 50 Index. Here are the details of the NFO issue:
| The scheme will open | February 14, 2023 |
| scheme close | February 28, 2023 |
| Schemes for continuous purchases/sales are reopened | Within 5 business days |
| Minimum amount | 500 rupees |
| Minimum SIP | 500 rupees |
| Fund’s NAV | Rs 10 during NFO period |
| entry road | none |
| exit road | none |
| dangerous | very high risk |
| standard | Nifty 50 TRI Index |
| fund manager | Mr. Aditya Mulki |
| Maximum TER | 1.00% |
| Ordinary expense ratio | 0.12% |
Navi ELSS Tax Saver Nifty 50 Index Fund SID
What is the investment objective of the Navi ELSS Tax Saver Nifty 50 Index Fund?
The investment objective of this scheme is to invest in companies whose securities are included in the Nifty 50 Index and seek to achieve index returns, subject to tracking error.
Investments in this scheme are subject to a statutory lock-in period of three years from the date of allocation to qualify for income tax benefits under Section 80C.
There is no assurance that the investment objectives of the Scheme will be realized.
What is the allocation pattern of this index fund?
Here’s how to invest in index funds:
| instrument type | min % | Max % | risk profile |
|---|---|---|---|
| Stocks and equity-related products covered by the Nifty 50 Index | 95% | 100% | expensive |
| Debt and money market securities | 0% | Five% | low to medium |
What’s included in the Nifty 50 Index?
1) The Nifty 50 Index is a well-diversified index of 50 companies that reflects overall market conditions.
2) The Nifty 50 Index is calculated using the float market capitalization method.
3) Nifty 50 can be used for a variety of purposes including fund portfolio benchmarking, index funds, ETFs and structured product launches.
Sector representation
Top components by weight
How does the Nifty 50 index perform?
Now let’s look at the performance of the underlying index that this fund is looking to invest in.
Why invest in Navi ELSS Tax Saver Nifty 50 Index Fund NFO?
There are several reasons to invest in such index funds.
1) A fund that invests in Nifty 50 companies. These are blue chip stocks that can offer better risk-adjusted returns over the medium to long term.
2) Such indices provide diversification benefits at the stock and sector level.
3) The index has provided stable returns over the last 5-10 years and since inception. As you can see, the index has produced an annualized return of 11.2% over the last five years and an annualized return of 11.1% since inception.
4) Investments in this fund are eligible for income tax concession of 80C up to Rs 1.5 Lacs during the financial year.
Some important risk factors to consider before investing in such funds
You should consider some of these risk/negative factors before investing.
1) This index fund invests in 50 shares. This is similar to investing directly in stocks (because you invest in a specific stock). Investing directly in stocks is considered high risk.
2) This fund has a lock-in period of 3 years from the date of investment. If you are investing through SIP, each SIP installment also has a 3-year lock-in period.
3) Invest up to 5% in debt securities. There are interest rate risk, reinvestment risk, credit risk and liquidity risk.
4) Investors should read the SID before investing in such mutual funds.
Also read: 2023 High Dividend Stocks
Should I invest in Navi ELSS Tax Saver Nifty 50 Index Fund NFO?
The Navi ELSS Tax Saver Nifty 50 Index Fund invests in Nifty 50 Index stocks and is offered at a low expense ratio. The index produces an annualized risk-adjusted return of 11% over the medium to long term. The fund also provides tax incentives from 80 cents to 1.5 lux during the financial year.
on the other hand, Active ELSS Mutual Funds It has generated 12% to 22% annualized returns over the last 10 years and 5% to 21% annualized returns over the last 5 years.
Risky investors looking for tax savings and stable returns can opt for such funds.
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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years.
