Should you invest in Nifty Next 50 Index Fund?

Munish Randev said, “The whole premise for Nifty Next 50 is that these are the next large-cap companies that you will see being part of the mainline index, and generally these are companies that are available at much better valuations.” , Founder, Cervin Family Office.

The data shows that in the last 19 years, out of the 75 stocks that have appeared in the Nifty 50 index, 51 are from the Nifty Next 50 index.

Nifty Next 50 is well diversified with financial services having the largest weightage at 19.07%, followed by consumer goods (16.91%), metals (10.97%), consumer services (10.25%) and pharma (7.91%). Is.

In comparison, the financial services sector has the highest weightage of 36.94% in the Nifty 50, which means that the performance of the heavyweight index is highly dependent on a particular sector.

On the outlook, experts believe that Nifty Next 50 may have an edge over the traditional Nifty 50. “In a polarized market, as we have been seeing for some time now, Nifty 50 is a better option over Nifty Next. 50. However, I believe the market is probably going to be a bit more non-polarized going forward. Hence, Nifty Next 50 Index can be seen to see if it is suitable for one’s asset allocation.”

However, despite the gains, the Nifty Next 50 index may go through a period of underperformance. The Nifty Next 50 Index has failed to outperform the returns delivered by the Nifty 50 Index during the calendar years 2018, 2019 and 2020.

“When the market goes through a bullish phase, where the money is concentrated on only 10-15 stocks, the mainline indices outperform the Nifty Next 50 index there,” said Randev.

According to the expert, with the split between Nifty Next 50 Index Fund and Nifty 50 Fund, it would be better for investors looking to invest in Nifty 100 Index.

Investors should note that any investment, whether it is in Nifty 50 Fund or Nifty Next 50 scheme, should be according to their risk profile, asset allocation and investment requirement.