Edelweiss Asset Management Company, led by , has announced the launch of India’s first hybrid passive index fund, which will have a mix of both equities and government bonds. The (NFO) has opened for subscription today, March 18 and will be available till April 1.
The launch of the hybrid passive fund comes as the landscape in India continues to evolve, with regulators enabling new categories of index-based investment strategies.
Speaking on the launch of the fund, Radhika Gupta, MD & CEO, Edelweiss Asset Management Company, said: “At Edelweiss, we have always believed in bringing simple yet powerful innovative solutions for investors. The Edelweiss Nifty LargeMidcap250 Plus 8–13 yr G-Sec 70:30 Index Fund is a reflection of that belief. It is the first hybrid passive product in India, combining simplicity and innovation to solve a customer need that has remained unaddressed for decades.”
Hybrid passive index fund: All you need to know
As the NFO opens today, here are key things you must know about India’s first hybrid passive index fund:
1. Scheme type
It is an open-ended index scheme combining and through a 70:30 allocation. The fund follows a passive strategy, meaning it simply tracks an index instead of actively picking stocks or bonds.
The fund follows a monthly rebalancing that enforces discipline, which means it will automatically reset between equity & debt.
2. Underlying index
The index fund seeks to replicate the Nifty LargeMidcap250 plus 8–13 year G-Sec 70:30 index. The equity component tracks the Nifty LargeMidcap250 Index, while the debt portion tracks the Nifty 8–13 yr G-Sec Index.
The fund aims to create a portfolio that combines broad equity exposure, which offers high growth prospects, with the relative stability of sovereign bonds.
3. Asset allocation
According to a press release by the AMC, the index fund will largely invest in the securities comprising the Nifty LargeMidcap250 Plus 8–13 yr G-Sec 70:30 Index, along with equity and equity-related instruments and government securities forming part of these two indices.
The equity part has equal exposure to large and mid-cap stocks, while the debt category has exposure only to sovereign debt, meaning zero credit risk.
4. Fund managers
The scheme will be managed by Bhavesh Jain and Bharat Lahoti for the equity portion, and Dhawal Dalal and Hetul Raval for the debt portion.
5. Risk factor
Investors must have a high risk appetite as the scheme is classified under the Very High-Risk category, given its high equity exposure
6. Who all should consider investing in the fund?
Both first-time and existing investors can consider this NFO as it blends equity with debt, thereby reducing volatility while offering higher returns than only debt funds. The fund can also be considered by investors who look to allocate for a 7-10 year view, as it is structurally designed for goal-based, long-horizon investing.
7. Mininum investment
The minimum NFO subscription is ₹100 and in multiples of ₹1 thereafter. There is no exit load.
8. Objective of the fund
The primary objective of the scheme is to generate returns through passive investment in equity and equity-related securities and debt securities, replicating the composition of the Nifty Large-Midcap250 Plus 8-13 yr G-Sec 70:30 Index, subject to tracking errors.
9. What are the benefits & risks of this fund?
Some of the benefits of the hybrid passive index fund NFO are:
- Low-cost, passive approach: Being a passively managed fund, it offers a cost-efficient and transparent investment strategy.
- Simple allocation framework: Eliminates the complexity of asset allocation, stock selection, and market timing.
- Diversification: Invests in both equity and debt, providing a balance between growth and stability.
- Automatic rebalancing: Monthly rebalancing keeps the portfolio aligned with its target allocation without active intervention.
10. What are the risks of investing in this NFO?
Some key risks that investors must know before investing are:
- High equity exposure: With 70% in equities, the fund remains highly sensitive to market volatility.
- Market-linked returns: Returns can fluctuate based on overall market conditions.
- No return guarantee: There is no assurance of fixed or positive returns.
- Interest rate risk: Government bonds can decline in value when interest rates rise.
Disclaimer: This story is for educational purposes only. We advise investors to check with certified experts before making any investment decisions.