• Maheswaran Hariharan

AssetPlus NFO Review: Quantum Nifty 50 ETF Fund of Fund

Updated: Oct 28

Quantum AMC has launched an NFO, which has opened for subscription from July 18th, 2022, to August 1st, 2022.


Investment Objective:


To generate wealth over the long term, suitable for investors having a moderate risk appetite who are comfortable with volatility in the short term.


Investment Strategy:


The fund emphasizes on Nifty 50 benchmark (Listed stocks on NSE from 1 to 50). Stocks are filtered based on the free-float market capitalization of the index with a precisely defined proportion assigned to each of them (50 stocks in this case). The focus is to create returns that can replicate the benchmark without any active human intervention.


Fund Manager: Hitendra Parekh

Benchmark: Nifty 50 TRI

Minimum Lumpsum Investment Amount: Rs 500

Minimum SIP Investment Amount: Rs 500


Fund Management Process:


1. The Selection criterion is purely based on the existing stock constitution of Nifty 50.

2. The Fund will replicate the Index based on the free-float market capitalization.

3. Any changes in the benchmark(Nifty 50) will automatically reflect in the fund.

4. The Portfolio is rebalanced every six months.


Pros:

  1. No fund manager bias or human intervention

  2. It focuses on India’s top 50 listed companies that are well-established and have a history of solid performance

  3. No exit load is applicable

  4. It is completely Sectoral and Style Agnostic

  5. Since it mirrors the index, the cost is low

Cons:

  1. It is Limited to just Nifty 50 Universe

  2. The weightage of each stock is directly linked to the index and cannot be actively changed at any point in time

  3. It is restricted to only a specific market capitalization

  4. The fund cannot take active calls like holding cash in a portfolio

This fund does not have active management but focuses more on the Nifty 50's stability and its historical capacity for inflation-beating returns. There is no filter used in selecting these stocks as every single one of them is included in a specific proportion which makes it a risky bet but, at the same time, removes manual intervention to churn stocks.


It is of utmost importance that the fund is discussed with your financial advisor and then ascertain whether it is suitable to invest in. Always read the scheme documents thoroughly before investing.

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