DSP Black Rock Equal NIFTY 50 Fund - NFO - Rating & Review - Avoid

DSP Black Rock Equal NIFTY 50 Fund – NFO – Rating & Review – Avoid

Roboadviso     Mutual Funds Rating     Posted On, Sat 21st October, 2017     No comments
Rate
  • Editor Rating
  • Rated 2 stars
  • 40%

  • DSP Black Rock Equal NIFTY 50 Fund
  • Reviewed by:
  • Published on:
  • Last modified: October 21, 2017
  • Product Idea
    Editor: 100%
  • Fund House
    Editor: 90%
  • Fund Manager
    Editor: 70%
  • Expense Ratio
    Editor: 50%

Dsp Black rock equal-nifty-50-fund rating review

DSP Black Rock AMC has recently launched a new Fund in India – DSP Black Rock Equal NIFTY 50 Fund. The Review and Rating of Fund is as under:

Features of the Fund:

  • Investment Objective – To invest in companies which are constituents of NIFTY 50  in equal proportion.
  • What is Equal Weight Index?
    Equal weights for every company within the index
    Quarterly realignment back to equal weights
    Periodic rebalancing books profits in outperformers, buys more of underperformers.
  • Benchmark – Nifty 50 Equal Weight Index
  • Exit Load – Nil
  • Minimum Investment – Rs. 1000
  • Fund Manager – Gauri Sekaria
  • Expense Ratio – 0.9% p.a.

Analysis:

  • The concept or underlying theme (Equal Weight Index) of Fund is very good and its very popular and successful in overseas/ developed markets.
  • It’s a Quant based fund driven by Mathematical formulas. The role or dependence on fund manager is minimal.
  • The Strategy of Equal Weight Index is good when markets have become efficient and matured and its difficult to create Alpha (Risk free return)
  • India is an inefficient market and Alpha generation is huge. This product may not do good now in India. It may do good when Alpha in India dies down which may be after 10-15 years.
  • For reference – ICICI Pru Focused Bluechip Fund which is a large cap fund and doesn’t deviates too much from Index has created an Alpha of 5% per annum in last 5 years over Nifty whereas DSP Fund hasn’t created any Alpha.
  • Expense Ratio of 0.9% is high especially when its almost similar to Index Fund.

Recommendation:

The concept of fund is good but too early for Indian Market. Avoid the fund as of now for investment and instead go for good funds which can create Alpha over the benchmark.

Pros

Good and Different Concept
Good Fund House

Cons

Concept is too early for Indian Market
High Expense Ratio

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