I know this. This is not a problem statement. This is what I WANT but not available so trying to figure out ways to get there and not be the so many people to just accept what is given. For this I might use Nifty 50, Nifty equal weight, Quality ETF and direct investing.
We only had the standard Nifty 50 Index but over the years they brought in Nifty 50 equal weighted index - someone thought about it and it is now available. The tail represents some of the best companies in India and not willing to sit on the fence just because the Index operates in a particular fashion.
Maybe in another few years, there will be a inverse ETF as @cvs as suggested. But until such time, need to figure out the best way to achieve my specific objective of being invested with the limited resources I have in the top 50 companies. Whether it will be index, direct or whatever I will willing to look at that
In your example of coal india whether included or not does not matter, but majority of the tail are included and I know for sure that the entire lot will not be removed.
Is there any active fund which invest in the tail of Nifty 50.
I was reviewing the monthly portfolio disclosure sent by SBI ETF Nifty 50. In the report Infosys has a weightage of 4.60% (market cap of 629,391.80 cr) whilst TCS with a Market Cap of 1,094,109.67 cr has a weigtage of 2.61%. Any reason for lower weightage of TCS vs Infosys.
yes, that is because how the nifty 50 index is structured.
Nifty 50 is not based on absolute market cap but on free-float market cap.
In simple terms it looks at market cap which is available for trading and so removes shares owned by promoters when calculating float.
Since TCS has very high promoter holding compared to Infosys, free float market cap of TCS is less than infosys and hence the weight in index is less too
Now, why does the relative weightage of these constituents in the Index, NOT match their relative market-cap?
One potential reason could be that it is the free-float market-cap
that is used to calculate the weightage of the index constituents.
On free-float market capitalisation - used by major index providers to compute weights - TCS is ranked eighth in the country. This is on account of high shareholding of promoter Tata Sons at nearly 72 per cent in the technology major. TCS’ promoter holding is one of the highest among top companies in the country and only slightly below the maximum threshold of 75 per cent.
