Nippon India Nifty Realty Index Fund – Direct (G) : NFO Details

The Nippon India Nifty Realty Index Fund Direct (G), subject to monitoring mistakes, the scheme's investment goal is to provide returns that are consistent with the total returns of the securities as represented by the Nifty Realty Index before expenses. The Nifty Realty TRI will serve as the scheme's benchmark. The plan will invest 95–100% of its funds in securities that make up the Nifty Realty Index and 0–5% in cash and cash equivalents, money market instruments, and/or funds that invest primarily in liquid or money market securities.

Details of the NFO: Nippon India Nifty Realty Index Fund – Direct (G)

Investment Objective and Strategy

Objective:

The investment objective of the scheme is to provide investment returns that commensurate to the total returns of the securities as represented by the Nifty Realty Index before expenses, subject to tracking errors. However, there is no assurance that the investment objective of the Scheme will be achieved.

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Investment Strategy:

The Nippon India Nifty Realty Index Fund Direct (G) employs a passive investment strategy aimed at closely tracking the performance of the Nifty Realty TRI. To achieve this, the fund primarily invests in the securities comprising the Nifty Realty Index, replicating the index's composition and weightage. At least 95% of the fund's assets are invested in index stocks, with up to 5% allocated to cash or money market instruments for liquidity needs. This approach ensures that the fund mirrors the index's performance without making active investment decisions or financial analyses.

Additionally, the fund may utilize derivatives like index options, index futures, stock options, and stock futures within regulatory limits, aiming to enhance returns or hedge against risks. The derivative strategies involve leverage, which can amplify both potential gains and risks. To manage tracking error, the fund regularly rebalances its portfolio to account for changes in the index composition and fund flows. The overarching goal is to match the total returns of the Nifty Realty Index, ensuring minimal deviation from its benchmark.

Risk associated with Nippon India Nifty Realty Index Fund Direct (G)

The Nippon India Nifty Realty Index Fund Direct (G) faces various risks tied to its passive investment strategy. Tracking error may cause returns to differ from the Nifty Realty Index due to delayed trades, transaction costs, or rebalancing needs. Since it mirrors the index’s performance without defensive positions, the fund is vulnerable to market downturns. The NAV is sensitive to fluctuations in the underlying stocks, political events, and economic conditions, which can impact performance. Additionally, investing in the realty sector index exposes the fund to liquidity and volatility risks. The fund may also face credit, interest rate, and liquidity risks when investing in fixed-income instruments for liquidity management.

Who Should Invest in the Nippon India Nifty Realty Index Fund Direct (G)?

Investors with a long-term investment horizon and a keen interest in thematic, equity-oriented funds should consider the Nippon India Nifty Realty Index Fund Direct (G). The Nippon Realty NFO suits investors seeking exposure to India’s real estate sector, with a high-risk tolerance and a long-term investment horizon. Ideal for those aiming to diversify into realty stocks within a passive index fund, it’s best for investors comfortable with potential market volatility and aligned with the Nifty Realty Index's performance.