Navi Nifty 50 Index Fund raises Rs 100 crore through NFO

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It’s raining money not just for initial public offers (IPOs) on the stock exchanges but also for new fund offers (NFOs) by mutual funds. Take the case of Flipkart co-founder Sachin Bansal owned Navi Mutual Fund, it raised Rs 100 crore through NFO from around 17,000 investors for its Navi Nifty 50 Index Fund. Navi Nifty 50 Index Fund is an open-ended equity scheme that would replicate the Nifty 50 index.

Commenting on crossing the Rs 100 crore NFO AUM (assets under management) mark, Saurabh Jain, managing director and CEO, Navi Mutual Fund Jain said, “The success of this launch is not only from the AUM of this NFO but also through the awareness that has spread across investors around Index Fund investing and expense ratio. This is visible through the 1.4 lakh users who visited our website during these 10 days. This is the beginning of a long-term partnership with our investors for wealth creation and we are delighted with the response we have received for this Index Fund NFO.”

The most unique feature of the Navi Nifty 50 Index Fund is the “low cost” compared to any other index scheme in the passive fund’s category. The 0.06% expense ratio proposed to be charged by the fund for its direct plan offering, is the lowest in the index schemes category so far. For index funds, the category average expense ratio is 0.25% and many existing index funds are charging expenses in the range of 0.15-0.20%.

Index funds basically invest in stocks that imitate a stock market index like the NSE Nifty, BSE Sensex, etc. These are passively managed funds which means that the fund manager invests in the same securities as present in the underlying index in the same proportion and doesn’t change the portfolio composition. These funds endeavour to offer returns comparable to the index that they track.

In the case of Navi Nifty 50 Index Fund will invest in securities covered by the Nifty 50 index and access to the growth of market leaders thereby mirroring the performance of benchmark index Nifty 50.

The NFO for the fund was open between 3-12 July 2021. However, investors who missed the NFO can still invest through online investment channels or financial advisors. Online channels include platforms like Groww, IND Money, Kuvera, Coin by Zerodha and Paytm Money.

NFO Trend

According to data collated by Value Research, LIC MF ETF – Nifty 50 that reported first declared asset under management of Rs 202.28 none of the schemes has shown over Rs 100 crore of first declared asset under management.

“Driven by strong stock market performance mutual funds are seeing increased inflows. Investors are becoming cost-conscious and Navi’s cost being lower than other index funds saw huge inflows. That apart passive funds are witnessing enhanced inflows as many large cap funds struggle to outperform the benchmarks,” explained Vishal Dhawan, Founder & CEO of Plan Ahead Wealth Advisors.