Nippon India BSE Sensex Next 30 Index Fund – NFO Overview

Two new passive investment products, the Nippon India BSE Sensex Next 30 Index Fund and the Nippon India BSE Sensex Next 30 ETF, have been introduced by Nippon Life India Asset Management (NAM India), one of the top asset managers in the nation. These products give investors strategic exposure to India's next-generation large-cap companies. The BSE Sensex Next 30 Index, which includes businesses ranked somewhat higher than the conventional BSE Sensex components, will be tracked by both products.  These funds seek to provide a comparatively under-represented portion of the large-cap equities market in India with affordable, rules-based access.

Key Features of NFO

• Scheme Type: Open-Ended Index Fund
• Category: Other Scheme – Index Funds
• Benchmark: BSE Sensex Next 30 Total Return Index (TRI)
• NFO Launch Date: 21-May-2025
• NFO Close Date: 04-Jun-2025
• Minimum Subscription: ₹1,000 and in multiples of Re. 1 thereafter
• Entry/Exit Load: No entry or exit load

Investment Objective of Nippon India BSE Sensex Next 30 Index Fund

The Nippon India BSE Sensex Next 30 Index Fund-Dir (G) aims to provide returns in line with the performance of the BSE Sensex Next 30 TRI, subject to tracking errors and expenses. However, no guarantee of meeting the objective is offered.

Nippon India BSE Sensex Next 30 Index Fund's Investment Strategy

This is a passively managed fund that will:

• Mimic the BSE Sensex Next 30 Index by investing in the same stocks in the same proportion.
• Invest at least 95% of its total assets in index constituents.
• Use short-term debt and money market instruments for liquidity management and expenses.
• May use equity derivatives like index/stock options or futures for efficient portfolio management.

Important Note: No active stock selection will take place—fund performance will purely reflect the underlying index performance.

Risks Involved in Nippon India BSE Sensex Next 30 Index Fund

1. Tracking Error Risk
Due to redemption, transaction costs, or delayed rebalancing. Any changes in the index composition or stock weightings may impact the fund's performance.

2. Equity Market Risks
Market volatility due to macroeconomic changes, interest rates, or political events. No active risk management by the fund manager during market downturns.

3. Liquidity Risk
Illiquid stocks in the index may hamper execution. A fund may hold temporary cash or derivatives to manage redemptions or corporate actions.

4. Derivative Risk
Leverage in derivatives may lead to amplified losses or gains. Execution depends on the fund manager’s ability to manage market movements.

5. Index Risk
Addition/removal of stocks from the index impacts fund holdings directly. Prices used for index calculation may vary from actual transaction prices.

6. Unlisted Securities Risk
Corporate actions could leave the fund temporarily holding unlisted or illiquid assets.

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Risk Mitigation Measures for Nippon India BSE Sensex Next 30

• Tracking error will be actively monitored and minimised through regular rebalancing.
• Portfolio will maintain asset-liability match to avoid liquidity crunch.
• Short-term debt allocation to manage price risk from interest rate fluctuations.
• Regular assessment of credit and interest rate risk for non-equity instruments.
• Proxy voting rights may be exercised depending on merit and timely notice.

Who Should Invest in Nippon India BSE Sensex Next 30?

The Nippon India BSE Sensex Next 30 Index Fund-Dir (G) is suitable for:

• Long-term passive investors looking to track the performance of India's large mid-cap stocks.
• Investors seeking diversification beyond the Nifty 50/Sensex.
• Those with moderate risk appetite are comfortable with equity market volatility and no fund manager discretion.

About BSE Sensex Next 30 Index

• Comprises 30 stocks just below the BSE Sensex 30 in terms of free-float market cap.
• Represents the next rung of blue-chip companies—strong fundamentals and growth potential.
• A good proxy for exposure to future large-cap companies.

Conclusion

The Nippon India BSE Sensex Next 30 Index Fund offers a cost-effective and low-risk route to invest in the emerging giants of India Inc. Its passive nature ensures transparency and low management costs, while its focus on the BSE Sensex Next 30 Index offers exposure to potentially the next big 30 companies in the Indian equity landscape