S2 EP6: Nifty 500 – Your Wider Gateway to the Indian Market

[00:00:00] Welcome to Axis Moneynomics by Axis Mutual Fund Imagine you are at a Grand Buffet with 500 different dishes to choose from. Instead of picking one or two dishes, if you get to taste a bit of everything,

[00:00:19] though the thought itself is so satiating, how about such an opportunity in the front of investing? Today, we are going to explore an investment opportunity that offers a similarly comprehensive experience in the stock market, the nifty 500 opportunity. Hello and welcome to yet another exciting episode of Axis Moneynomics.

[00:00:43] This is Hari from Axis Mutual Fund and today we are with us, Vandana Trivedi, head of institutional and passive business at Axis AMC to help us know more on this. Welcome to Axis Moneynomics Vandana. Hey Hari, thanks a lot for having me here.

[00:01:10] Vandana, there are so many investment options in the stock market. How does a beginner go about investing and what do you think is a good starting point for them? Yes Hari, there are so many investment options today that an investor could very well get

[00:01:23] overwhelmed with the number of options that are available out there. However, there is a hack to this as well. What an investor could do especially a beginner is to start with a broad market exposure rather than just trying to buy individual stocks

[00:01:40] or trying to understand individual sectors. So, market indices or index as we call them can be a great way to achieve this because they include in one investment option a number of companies from different sectors. Thus what an investor achieves is that he spreads his

[00:02:01] risks and at the same time captures the overall opportunity that index would provide. In this case, the India growth story opportunity that could be captured by some of these broad market indices. Speaking of market indices, Vandana I understand the Nifty 500 index is one

[00:02:21] such index. Could you explain to all our listeners know what the Nifty 500 index is all about and why it can be beneficial for investors to get an exposure to this index? Absolutely Hari, the Nifty 500 index is a broad based index that represents over 90% of the free

[00:02:39] float market capitalization of stocks that are listed on the National Stock Exchange of India that is the NSE of India. These numbers are as of March 31st, 2024. Sure, but what makes this Nifty 500 index beneficial for a lot of beginners who want to

[00:02:57] begin their investment Vandana? Well, there are several benefits. Firstly, of course, it is diversification. Since the index includes companies from various sectors, it helps spread risk. Instead of putting all your eggs in one basket, you get to spread them

[00:03:13] across 500 different companies. Also, investing in an index like the Nifty 500 is way simpler than trying to pick individual stocks. It reduces the complexity of stock selection and helps mitigate the risk of investing in just a single stock that is it

[00:03:31] tries to reduce volatility of just having a single stock exposure. Plus with the broad market exposure that it offers, you are not overly reliant on just any one company or any one sector which is true of cyclical growth periods. So the first one was diversification.

[00:03:51] The second big benefit in my opinion Hari is market representation and performance representation as well. By tracking the Nifty 500, you're essentially getting an exposure to a significant portion of the Indian capital markets or the Indian equity markets. Like we told you,

[00:04:09] the Nifty 500 is tracking 90% of the free float market capitalization of the NSE. So to give you a perspective for the last 15 out of the last 18 calendar years, this index has delivered a positive return. Finally, for investors with a long-term

[00:04:28] horizon, this index offers the potential for gains that can beat inflation as well. Again, data of performance past performance of this index suggests that so if we were to look at the rolling returns, rolling 10 year returns, there has never been a single year where this

[00:04:47] index has given a negative return. Therefore what it means is that by staying invested for longer periods of time in this example, about 10 years or more, you can actually benefit from the potential growth of the economy. Great, Vandana, I think this makes a lot of sense.

[00:05:02] You've talked about the fact that by investing in the Nifty 500 index, you get the diversification thereby an exposure to various sectors and industries. You've talked about the representation in the sense that you get an exposure to the Indian economy in a way. And you also said

[00:05:20] that by investing for the long term, investors can generate returns that can potentially beat it. Wonderful. I think there's some exciting news for all our investors to get the access to the Nifty 500 index and that's why the access Nifty 500 index fund new fund offers.

[00:05:42] Vandana, could you quickly introduce this new fund to all our business? Certainly, the access Nifty 500 index fund is a passively managed mutual fund that aims to track the performance of the Nifty 500 total return index. This means that it will mirror the index as

[00:05:59] closely as possible. The fund is therefore packed with all the benefits that we have just been discussing Hari. This is a new fund offer that is an NFO and the NFO will begin from the 26th of June 2024 and will last until the 9th of July 2024.

[00:06:17] Wow, that's super exciting Vandana. Just one quick question on this Vandana, who are the right set of customers for this fund? Sure Hari, certainly this fund is a fund for everyone. However, to get more specific, this fund is particularly suitable for retail investors who are seeking long-term wealth

[00:06:36] creation by participation in the equity markets. However, they may also be people who do not have either the time or the expertise to actively invest in the markets. Additionally, this fund is also very suitable for designing investors or investors who already have exposures to equity

[00:06:57] markets to build this as a part of their core equity investment portfolio. So be it a first time retail investor who is a beginner to equity markets or a discerning well-experienced equity investor, for both of these categories this fund is a perfect fit. One final question Vandana,

[00:07:17] you did touch upon the point that by participating in the Nifty 500 one could sort of in a way mirror what is happening in the Indian economy. Could you explain this in more detail? Sure Hari, I'm glad that you asked me this question. So when we say that this

[00:07:32] is a broad-based index what do we mean? What we mean is that this provides investors with a way to participate in the overall growth of the Indian economy. We've been all hearing and also experiencing

[00:07:46] how equity markets have been doing very well, how India is stacked up to be the third or the fifth largest GDP in the economy, how our market capitalization is also heading to be in the top

[00:07:59] five in terms of comparison with other major economies in the world. What the Nifty 500 index does is that it gives you an exposure to various sectors such as IT, financial services, healthcare, consumer goods also importantly to sectors which may not be there in other indices such as

[00:08:20] a realty that is a real estate sector such as consumer services which essentially captures all your hotels and other consumer facing service companies. This means that when you invest in the access Nifty 500 index fund, you're essentially investing in the overall growth and development

[00:08:40] of our country that is overall growth and development of India. You may already know obviously that you know the numbers in terms of India poised to become the third largest economy in GDP terms by 2027 has been something which has been spoken about by numerous researchers

[00:08:58] and economists. So the fund will give investors an opportunity to capture some of these opportunities that are there in the country by virtue of exposure to both large cap companies and emerging growth of mid and small cap companies all with just one single investment. Superb you know

[00:09:19] while you were talking about this Vandana I could sort of visualize you know participating in the growth story of the country you know as the Indian market grows driven by a variety of factors like demographic dividend, the young population that we have, rapid urbanization and a digital

[00:09:37] revolution that we have all been witnessing for quite some time now. Funds like this offer a way to tap into that potential. That does make a lot of sense Vandana. Thank you so much

[00:09:47] Vandana for sharing your valuable insights with us today. Thanks a lot Hari it was a pleasure to be here and that's a wrap for today thank you for tuning in if you found this episode valuable

[00:09:59] make sure to follow our podcast AXIS Moneynomics. Do share it with your friends and family diving into the world of investing and yes keep an eye out for more updates on our AXIS

[00:10:13] Nifty 500 index fund and join us on this growth journey until next time this is your host Hari signing off. Mutual fund investments are subject to market risks read all scheme related documents carefully.