Aditya Birla Sun Life Mutual Fund has launched Aditya Birla Sun Life Nifty 50 Equal Weight Index Fund, an open ended scheme tracking the Nifty 50 Equal Weight TR Index.
All constituents of the Nifty 50 Index are part of the Nifty 50 Equal Weight index. But unlike Nifty 50 which is based on market capitalisation, the equal weight index treats all of them equally irrespective of their relative market cap. Simply put, the index keeps the allocation of the constituent companies at 2% each. This aims to reduce the concentration risk at an individual stock and overall sector level.
The index is automatically re-constituted every 6 months in line with the Nifty 50, allowing for natural selection of top movers. Additionally, the portfolio is rebalanced on a quarterly basis to book profit if any.
A Balasubramanian, MD & CEO, Aditya Birla Sun Life MF said, “Equal allocation to the 50 large cap companies can benefit from growth opportunities across the board rather than relying on the performance of few heavyweights. With a period of broad based economic recovery on the anvil, high growth sectors like cement and cement products, pharma, metals and services are better represented in the Nifty 50 Equal Weight Index. Over time, as markets and economy grow, we expect the Equal Weight (EW) Index to do better than Nifty 50. It has outperformed the Nifty 50 over short and long term periods. In fact some of the stock level polarisation in the base index that we saw in 2018-19 is already reversing sharply.”
