To the top 50 Indian companies via equal-weights
Invests equally in each stock without any bias, no fund manager 'thinking' or emotions involved
Comparatively lower expense ratio than active large-cap funds
Avoids undue concentration in a few stocks/sectors
To buy just 1 share of each stock in Nifty 50 (as of Sep 30, 2021), you will need to pay ₹1.55 lakh + brokerage.
But this ETF allows you to buy same 50 stocks starting as low as ₹5,000
~29X Growth of the Nifty 50 Equal Weight Index over last ~22 years
2.01% Alpha: Nifty 50 Equal Weight Index (16.44% CAGR) outperformed the Nifty 50 Index (14.42% CAGR)
This ETF will replicate the Nifty 50 Equal Weight TRI, a derivative of the Nifty 50 Index
Instead of a market cap-based weightage (like the Nifty 50 index), all 50 stocks from the Nifty 50 Index will be approximately equally weighted at 2% each
Expect short-term out-performance or under-performance in the Nifty 50 Equal Weight TRI, esp. during periods of market ups & downs.
-52% in 1 year
Lowest ever 1 year performance3
+136% in 1 year
Highest ever 1 year performance3
Over any 1-year period, the Nifty 50 Equal Weight TRI has given.
27% of the time3
More than 12% return
50% of the time3
Nifty 50 Equal Weight TRI is likely to underperform Nifty 50 when the larger weighted stocks in the portfolio outperform the smaller weighted stocks in up or down markets, i.e. in highly polarized markets.
Equity investing means exposure to risk – thus having a long-term (7+ years) outlook is key to maximizing outcomes.
You need a trading account with a broker/ sub-broker
You also need a Demat account for holding the ETF units
What is an ETF?
Exchange Traded Funds, or ETFs, are a type of security that track an index, sector, commodities or other assets, but which can be purchased or sold on the stock exchange like any regular stock. They combine the features and potential benefits of stocks or bonds and mutual funds. Like individual stocks, ETFs can be traded throughout the day at real time prices that change based on supply and demand.
What are the benefits of an ETF?
Simplicity - Buying / Selling ETFs is as simple as buying / selling any other stock on the exchange.
Realtime Trading - ETFs allow investors to take benefit of intraday movements in the market, which is not possible with open-ended Funds.
Low cost - The cost of investing in ETFs is generally lower than an active fund invested in the same market of assets.
Seamless trading - Existing investors insulated from bearing transaction costs of other investors coming in or going out.
Transparency - Holdings published daily, so investor always knows exactly what is owned.
How is an equal weight strategy different from market cap strategy?
Under Market cap strategy, stocks are weighed based on free-float market capitalisation while under equal weight strategy, stocks are weighed equally (there is no valuation or size bias).
While the weights for all stocks are equal, weights for relatively small stocks are still high compared to their weights in market cap weight index strategies – which could be a reason for the equal weight index to outperform.
Smaller capitalization stocks are typically less researched and less tracked and hence has more opportunities of being undervalued and thus tends to outperform as and when such pricing discrepancies are identified and corrected – and when such stocks outperform, having higher weights to such stocks in an equal weighted index strategy pulls the index return up - outshining other index strategies.
How is the Nifty 50 Equal Weight Index different from Nifty 50 Index?
The NIFTY50 Equal Weight Index represents an alternative weighting index strategy to its market capitalization weighted parent index, the NIFTY 50. The index includes the same companies as its parent, however, weighted equally.
Example – HDFC Bank constitutes 9.1% of the Nifty 50 Index due to its size represented through its large free-float market cap. While the same stock has 2.0% weight in Nifty 50 Equal Weight Index, thereby eliminating bias caused by size of the company.
Data as on – Sep 30, 2021
Is there any other existing product on the Nifty 50 Equal Weight Index?
DSP Equal Nifty 50 Index Fund was the first product to be launched on the Nifty 50 Equal Weight Index. Recently, two new index funds on the Nifty 50 Equal Weight Index were launched. However, DSP Nifty 50 Equal Weight ETF is the first Exchange Traded Fund to be launched on this index.
Who is the fund manager for the fund?
Anil Ghelani and Diipesh Shah will be the fund managers of the ETF.
Why you should invest in equal-weight funds?
"Investors looking for balanced diversification & anti-momentum ways to play equity index funds can consider buying units of equal weight index funds tracking Nifty 50 for their core portfolio. You get the same set of top-quality stocks that the bluechip baskets have, but with an important twist - equal weight for all." – The Hindu BusinessLine
Equal Weight Strategy - a US perspective
"Download this deck to get a perspective on the rise, the size & the performance of the 'Equal-Weight' strategy in the US." – Internal
Equal vs market cap-weighted portfolios in stock market crashes
"Of the 18 worst stock market crashes between 1926 to 2021, some, like the 1987 plunge, were short in duration, while others were long bear markets extending for well over a year. These declines were driven by diverse causes, from wars and geopolitical strife to economic recessions, bubbles & a pandemic. Broadly speaking, the drawdowns of equal-weighted portfolios and market cap-weighted counterparts were similar. However, in five cases — in 1932, 1933, 1942, 1978, and 2002 — they diverged by 10% or more. In each instance, the equal-weighted portfolio had smaller drawdowns. Read on for a US-based perspective." – ETF Stream
Magic Formula for Wealth Creation - An Equal-Weighted Index
"In a tense cricket match, while defending a low total, a calm captain will show faith in the bowler, motivate the fielders & expect equal effort from all players. It is not about just the 'heavyweight' stars, but all players need to perform equally and work hard to try to win the match. In investing, an index fund using a similar 'equal effort (weight) strategy' can deliver similar outcomes." - Economic Times.
Depolarization has Begun - First Big Pause since 2018
"It is often seen that Indian markets follow trends observed in the US. We can see that "Depolarisation" has started in the US Markets- top 50 stocks in the S&P 500 Index were increasing since 2015. However, a recent reversal indicates initial signs of depolarization in the US markets. Similarly, a depolarisation trend is visible in India –bottom-30 stocks in the Nifty 50 index have broken-out of a downtrend, which was going on since 2018." - Internal
Simple yet Powerful – Nifty 50 Equal Weight Index Research Paper
"In this research paper we will see how Nifty 50 Equal Weight Index has performed vs Nifty50 over different time horizons. We will dig into the reasons behind the performance and also look at the advantages & disadvantages of the Equal Weight strategy." - Internal
Peak Polarisation in Large Caps - Start of Mean Reversion?
"Nifty 50 index consists of 'good' companies that are leaders in their sectors, large in size and have better chances of riding through business cycles. Stock weights in Nifty 50 are heavily tilted to businesses with higher market capitalization- which effectively means betting more on larger companies. But who led the rally post polarization in Index heavyweights? Will history repeat? In times of crises, can the same 50 stocks help fetch better returns with a slight twist in weights?" - Internal
Data Source for any statistics/ figures above unless otherwise mentioned: Internal
1 As on Sep 30, 2021.
2 Based on CAGR returns over the period Jun 30, 1999 to Sep 30, 2021.
3 Based on daily rolling returns over the period Jun 30, 1999 to Sep 30, 2021.
For more information, product labeling & riskometers of DSP Equal Nifty 50 Fund & its benchmark, click here.
This content is for information purposes only. It should not be construed as investment advice to any party. In this material the spokesperson or DSP Investment Managers Pvt. Ltd. (the AMC) has used information that is publicly available, including information developed in-house. Information gathered & used is believed to be from reliable sources. While utmost care has been exercised while preparing this content, the AMC or any person connected does not warrant the completeness or accuracy of the information & disclaims all liabilities, losses & damages arising out of its use. Recipient(s) before acting on any information herein should make their own investigation & seek appropriate professional advice. Statements contained herein may include statements of future expectations & other forward-looking statements that are based on prevailing market conditions / various other factors & involve known & unknown risks & uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Past performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments. Any sector(s)/stock(s)/issuer(s) mentioned do not constitute any recommendation of the same & schemes of DSP Mutual Fund may or may not have any future position/s in them. Figures mentioned, if any, pertain to performance of the index & do not in any manner indicate the returns/performance of the Scheme. It is not possible to invest directly in an index. All opinions, figures, charts/graphs & data included are as on date and are subject to change without notice. For complete details on investment objective, investment strategy, asset allocation, scheme specific risk factors & more details, please read the Scheme Information Document, Statement of Additional Information & Key Information Memorandum of respective schemes available on ISC of AMC and also on www.dspim.com. There is no assurance of any returns/ capital protection/ capital guarantee to investors in any of the mentioned Schemes. This content may have indicated the strategy/ investment approach currently followed by some Schemes & the same may change in future depending on market conditions & other factors. The portfolio of any schemes mentioned is subject to changes within the provisions of the Scheme Information Document of the scheme. For index disclaimer visit https://www.dspim.com/mandatory-disclosure. An investor, by subscribing or purchasing an interest in the Product(s), will be regarded as having acknowledged, understood & accepted the disclaimer referred to in the Clauses above & will be bound by it.
It is to be distinctly understood that the permission given by NSE should not in any way be deemed or construed that the Scheme Information Document has been cleared or approved by NSE nor does it certify the correctness or completeness of any of the contents of the Scheme Information Document. The investors are advised to refer to the Scheme Information Document for the full text of the 'Disclaimer Clause of NSE".
It is to be distinctly understood that the permission given by BSE Limited should not in any way be deemed or construed that the SID has been cleared or approved by BSE Limited nor does it certify the correctness or completeness of any of the contents of the SID. The investors are advised to refer to the SID for the full text of the Disclaimer clause of the BSE Limited.
This product is suitable for investors who are seeking*
Long-term capital growth.
Investment in equity and equity related securities covered by NIFTY50 Equal Weight Index, subject to tracking error.
*Investors should consult their financial advisers if in doubt about whether the Scheme is suitable for them.
NIFTY50 Equal Weight Index