Why don't we have a Nifty Equal Next 50 Fund or ETF yet?

[rupeshmandal]

We have Nifty Equal 50 Funds by DSP and one recently launched by Aditya Birla AMC. Also I read that DSP has applied for NE50 ETF too.

Why don’t we have an equal weight fund or ETF for Nifty Next 50 yet? Can help mitigate concentration risks as we saw with Adani stocks in NN50 index.

Though there are Nifty Equal 100 funds by Sundaram and Principal but their AUM is too low. Also separate funds or ETF for NE50 and NEN50 can serve better for allocation purpose.

Maybe Zerodha AMC, when it launches can look into it.

@nithin adding it to my existing wishlist:

1. Nifty 50 based ELSS fund and ETF
2. Growth oriented Liquid ETF (not dividend based)
3. Nifty Equal Next 50 fund and ETF

[Prayag]

@rupeshmandal

Why don’t we have an equal weight fund or ETF for Nifty Next 50 yet?

I think this might be because there is no Equal Weight index in existence currently for Nifty Next 50 to benchmark such a fund/ETF against -

[Akash_Shah]

Index can be created if there is demand from AMC, so that is not a problem.

To answer @rupeshmandal 's question, there are not Nifty equal Next 50 fund is because there is no demand for it.
Practically, Nifty Next 50 itself is very niche (though it is very popular among chat forums, it still does not have coverage among common public), hardly 5-6 funds are operating in it, of which probably 3-4 started just in last one year.
AUM of NN50 funds is still low.

So building a Nifty Equal Next 50 fund would be like finding a niche within niche and doesn’t look lucrative for any AMC yet.
Frankly Nifty Equal 50 is still struggling, so AMC might take some time to warm up to Nifty equal next 50

[Akash_Shah]

Creating a new index is not a very big tasks. AMC need to pay up to index creator and a new index with whatever you want in it can be created.
Finally, index is a just a mathematical expression for underlying.

So if an AMC wants to start a fund with some rule they can easily get a new benchmark created, provided there is demand for it and AMC thinks it is worth their effort.

[Akash_Shah]

@neha1101

This I agree, but is it easy to create a new benchmark index like nifty 50 or sensex which is followed by the world.

I am not sure how that is relevant to the post which we are discussing.

I was trying to answer your below question:

@neha1101

AMC can bring out a fund, but not sure, if a benchmark Index can be replicated.

To answer this, a index can be created and can be used as bench mark by one or multiple fund. Entire world need not follow it

@neha1101

Another doubt, can a AMC start a ETF without a underlying Index?

No AMC will start an ETF without underlying index. Instead an AMC can get an underlying index created as needed and can start ETF based on it.

To give an example refer Bharat Bond Series of ETFs. There are around 4 separate ETF each tracking a different index (based on redemption year)
So AMC has got 4 index created. In future when they launch next series of bharat bond, they will get new indices