Nippon Life India Asset Management has launched Passive Flexicap Fund of Fund, an open-ended fund of funds (FoF) scheme that will invest in units of ETFs/Index Funds of Nippon India Mutual Fund.

The fund will be benchmarked to the Nifty 500 TRI. The new fund offering (NFO) will close on December 24. The minimum investment required is ₹5,000.

Different parts of the market ― large-cap, mid-cap and small-cap ― perform at various points in time. It is difficult to predict which part of the markets would outperform. Hence, staying invested across market-caps may help generate potentially better returns over the long run.

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Nippon India Passive Flexicap FoF will invest across market-caps, on the basis of average allocation of all active multi-cap funds in the industry into large-, mid- and small-cap stocks as provided by Crisil every month. By doing so, the fund aims to capture market wisdom along with industry wisdom and endeavour to eliminate individual fund manager biases towards market-cap allocation and sector selection.

The scheme follows a passive investment strategy and will predominantly invest in large-cap ETF/ Index Fund, mid-cap ETF and small-cap ETF.

The underlying stocks of the above ETFs / Index Funds are mutually exclusive. Hence, the fund would have investments in 500 stocks. However, the actual allocation to the above funds would be based on the mutual fund industry’s multi-cap category allocation towards the different market-caps. Investors will bear the recurring expenses of the scheme, in addition to the expenses of the underlying scheme.

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Saugata Chatterjee, Co-Chief Business Officer, Nippon India Mutual Fund, said the fund would help investors participate in all parts of the markets by aggregating the market and industry wisdom at a low cost. The maximum total expense ratio is 1 per cent.

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