Nifty
A Nifty Index Fund is an option worth considering for investors who are not keen on investing too much but seek Equity exposure. Before investing in Nifty, understand the concept of this investment instrument in depth. Index Funds are Mutual Funds tracking a Stock Market Index.
If there is a change in any stock’s proportion, fund managers make changes to ensure the weightage of the portfolio constituents matches the Nifty 50 Index Fund. The fund allocates its corpus to Equity Shares of the top 50 Indian companies in market capitalisation. It is a hypothetical portfolio reflecting the performance of the Indian Stock Market and generates similar returns as this market index.
How to invest?
If you visit a fund house’s website, fill in the required information and complete the e-KYC process by providing Aadhaar and PAN Card details. Upon successful verification, you start investing in Nifty 50 Index Funds provided by the fund house. You can also invest through the mobile app of the fund house by downloading it, registering with the required contact information, and completing the e-KYC process.
Factors
Although investing in a Nifty Index Fund is hassle-free and quick, know certain factors to make an informed decision. Ensure your goals align with the investment to reap decent returns:
Investment objective
The Index Funds objective is to match the market performance. Accordingly, they suit investors looking for moderate returns. Identify your financial goals before investing in them.
Tracking error
It refers to the difference between the returns generated by an Index Fund and the benchmark index. The metric evaluates how well the Nifty 50 Fund has managed to track the movements of the underlying benchmark. If the tracking error is low, the fund performs better.
Expense ratio
This is the annual charge that fund houses levy on investors for covering the expenses of running a fund. They include management fees, advertising costs, etc. The yearly fee directly impacts the net annual returns earned by an investor. Hence, it is necessary to consider this aspect before investing in Index Funds.
Benefits
There are many benefits of investing in Index Funds. Since they pool money from several investors, Mutual Fund companies allow you to invest a smaller sum. You can start investing with Rs. 500 monthly following the Systematic Investment Plan. Be a part-owner of all the 50 stocks in the same proportion as the index.
The flexibility of investing in Nifty through Index Funds is not limited to low investment amounts through SIP. An increase or decrease in the amount you are investing is also possible. It makes the process of investing extraordinarily convenient and hassle-free. Approach the right investment advisor for guidance.
Conclusion
You can invest in 50 leaders in the sectors through Nifty Index. Give yourself a chance to accumulate wealth in the long term. Investing in the Nifty Index is easy, cost-effective, and convenient through Index Mutual Funds.
Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. AMFI Regn. No.: ARN-0845. We are distributors for Mutual funds. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Please note, Mutual Fund related services are not Exchange traded products and I-Sec is just acting as distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein mentioned are solely for informational and educational purpose.
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