Get your Free Wealth Management Tool, to explore your path to Financial Freedom now!
Quantum Mutual Fund has launched the Quantum Nifty 50 ETF Fund of Fund. This fund will
be India’s first open-ended Nifty 50 ETF Fund of Fund and this scheme will be investing in
units of Quantum Nifty 50 ETF. It basically provides an opportunity for passive investors to
be a part of India’s growth story by providing exposure to the Nifty 50 Index, which is one of
the benchmark indices of the Indian Stock Market.
The investment objective of the Scheme as per the fund house is “To provide capital
appreciation by investing in units of Quantum Nifty 50 ETF – Replicating / Tracking Nifty 50
Index but there is no assurance or guarantee that the investment objective of the Scheme
will be achieved” and The fund combines the efficiency of an ETF with the convenience of an
index fund, giving investors the best of both worlds.
Basic information about the NFO:
| Issue open | 18-Jul-22 |
| Issue close | 01-Aug-22 |
| Fund manager | Hitendra Parekh (Also manages the underlying Quantum nifty 50 ETF) |
| Benchmark | Nifty 50 |
| Exit Load | 0 |
| Minimum investment amount | 500 |
| Plan | Growth |
| Category | Large cap |
Also Read: All about investing in Sovereign Green Bonds
Pros and Risks:
Firstly let’s look at the pros:
☐The benefit of diversification.
☐The minimum investment is low and SIP option is available so it is more accessible for small investors.
☐Low tracking error of underlying fund.
☐No Demat account is required.
Now, some of the risks involved:
☐The risk involved is high since it mostly deals with equities (100 – 95% Quantum nifty
equity and 0-5% of Government securities & T.bill Maturity up to 91 days, Tri-party
repo and liquid schemes of mutual funds).
☐It is a long-term investment-focused fund so there might be some near-term consolidation.
Underlying Quantum Nifty 50 ETF risk ratio:
☐Beta : 0.99
☐Sharpe Ratio: 0.44
☐Treynor’s Ratio: 0.08
☐Sortino Ratio: 0.52
Conclusion:
This fund, when compared to other fund of funds, doesn’t provide much of diversification since it mainly holds units of the Quantum nifty 50 ETF but for people interested in the index ETF this can could be an option since this FOF comes with the flexibility of a mutual fund, now you may ask why not choose existing Index funds that tracks Nify 50, you are right however, Though the fund is not very unique when compared to other index funds it has lower expense ratio hence after considering all the factors, we would recommend that passive investors with long-term investment objective may look at this NFO.
Also Read: Market Outlook – July’22
