Bandhan Nifty Next 50 Index Fund - Direct (G) : NFO Details

Bandhan Mutual Fund has launched the Bandhan Nifty 50 Index Fund – Direct (G), an open-ended scheme designed to replicate the Nifty Next 50 Index, which consists of the 50 largest companies ranked just beyond the Nifty 50. The New Fund Offer (NFO) opens on February 13 and closes on February 25, with the scheme benchmarked against the Nifty Next 50 TRI and managed by Nemish Sheth. The fund aims to provide investors with exposure to high-growth companies across diverse sectors like consumer discretionary, FMCG, and IT. Historically, the Nifty Next 50 Index has outperformed the Nifty 50 over multiple market cycles. With the recent correction pushing the index down by over 20% and below its five-year average, this could present a strong investment opportunity. Investors can start with a minimum lump sum investment of ₹1,000, while SIP investments start at ₹100 with a minimum of six installments. By tracking the Nifty Next 50 Index, the fund offers investors a cost-effective, passive investment strategy to participate in India’s evolving equity market.

Details of the NFO: Bandhan Nifty 50 Index Fund – Direct (G)

Investment Objective and Strategy

The investment objective of the Bandhan Nifty 50 Index Fund – Direct (G) is to replicate the Nifty Next 50 Index by investing in securities  of the  Nifty Next 50 Index  in  the  same proportion / weightage with an aim to provide returns before expenses that track the total return of Nifty Next 50 Index, subject to tracking errors.

However, there is no assurance or guarantee that the objectives of the Bandhan Nifty 50 Index Fund – Direct (G) will be realized and the scheme does not assure or guarantee any return.

Investment Strategy:

The Bandhan Nifty 50 Index Fund – Direct (G) will be managed passively with investments in stocks in proportion to the weights of these stocks in the Nifty Next 50 Index. The investment strategy would revolve around reducing the tracking error through rebalancing the portfolio, considering the change in weights of stocks in the index as well as the incremental collections/redemptions from the Scheme. 

The corpus of the Scheme will be invested in equity and equity related products & in debt and money market instruments. Subject to the Regulations, the corpus of the Scheme can be invested in any (but not exclusively) of the following securities / instruments:

1.Equity and Equity related instruments belonging to Nifty Next 50 Index.

2.Equity Derivatives

3.Debt securities and money market instruments including G-Sec/T-Bills/Cash Management Bills and TREPS

4.Certificate of Deposits (CDs).

5.Commercial Paper (CPs).

6.Other Mutual Funds

7.Any other securities / instruments as may be permitted by SEBI from time to time, subject to regulatory approvals if any.

The  securities  mentioned  above  could  be  listed,  privately  placed,  secured,  unsecured  and  of  any maturity. The securities  may  be  acquired  through  secondary  market  operations,  private  placement, rights offers or negotiated deals. Pending deployment of funds of the Scheme in securities in terms of the investment objective of the Scheme, the AMC may park the funds of the Scheme in short term deposits of scheduled commercial banks, subject to the guidelines mentioned under clause 12.16 of SEBI Master Circular. The AMC shall not  charge  any  investment management  and  advisory  fees  for  parking  of  funds  in  such  short  term deposits of scheduled commercial banks for the scheme.

What Type of Investor Should Invest in Bandhan Nifty 50 Index Fund – Direct (G)?

The Bandhan Nifty 50 Index Fund – Direct (G) is ideal for investors looking for long-term wealth creation through passive investing in India's top emerging large-cap companies. It suits investors who prefer index funds and want exposure to companies that are next in line to enter the Nifty 50. Since the Nifty Next 50 Index historically outperforms the Nifty 50 across market cycles, this fund is suitable for those who believe in long-term growth potential and sectoral diversification across industries like consumer discretionary, FMCG, and IT.

It is also a good option for investors seeking a cost-effective investment strategy with low expenses and minimal active management risks. Those starting with a small amount can benefit from SIP investments as low as ₹100, making it an attractive option for new and experienced investors alike. Additionally, investors willing to stay invested despite short-term market volatility can benefit from potential future recoveries, especially after the recent correction in the index.

What Are the Risks Associated with Bandhan Nifty 50 Index Fund – Direct (G)?

While the Bandhan Nifty 50 Index Fund – Direct (G) offers growth opportunities, it comes with certain risks. Being a passive fund, it is fully exposed to market fluctuations, and any decline in the Nifty Next 50 Index will directly impact the fund's performance. Tracking error risk is another concern, as slight variations between the index and fund returns may occur due to fund management constraints and rebalancing.

Additionally, mid-sized companies in the Bandhan Nifty 50 Index Fund – Direct (G) can be more volatile compared to Nifty 50 companies, making this fund riskier than traditional large-cap index funds. Liquidity risk is another factor, as some stocks in the Nifty Next 50 Index may have lower trading volumes. Furthermore, short-term investors may not benefit, as the fund is better suited for long-term investments. Finally, economic downturns, policy changes, and sector-specific risks could impact the fund's returns, requiring investors to have a high risk tolerance and patience.