Tata Launches Nifty Midcap 150 Index Fund NFO – Ride India’s Midcap Growth Story from June 2!

The NFO is a new index fund offering that aims to deliver long-term capital appreciation by closely tracking the Nifty Midcap 150 Index (TRI). As an open-ended scheme, it offers investors an opportunity to invest in a diversified portfolio of midcap companies, replicating the composition and returns of the benchmark index.

By passively investing in midcap equities, the scheme seeks to provide investors with a cost-effective and transparent investment route to participate in India's midcap growth story. It ensures liquidity by offering daily resale and repurchase options. This NFO is suitable for those looking for index-based exposure to midcap stocks without active fund management risks.

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Key Features of Tata Nifty Midcap 150 Index Fund

• Opening Date: 02 Jun 2025
• Closing Date: 16 Jun 2025
• Exit Load: 0.25% if redeemed within 15 days of allotment
• Minimum Investment: ₹5,000 and in multiples of ₹1 thereafter
• Minimum Additional Investment: ₹1,000 and in multiples of ₹1 thereafter
• Scheme Type: Open-ended index fund tracking Nifty Midcap 150 Index (TRI)
• Benchmark: Nifty Midcap 150 Index (TRI)

Objective of Tata Nifty Midcap 150 Index Fund

The primary objective of the Tata Nifty Midcap 150 Index Fund - Direct (G) - NFO is to generate returns that are in line with the performance of the Nifty Midcap 150 Index (TRI), before expenses, subject to tracking error. However, there is no assurance or guarantee that the Tata Nifty Midcap 150 Index Fund - Direct (G) - NFO objective will be realised.

Investment Strategy of Tata Nifty Midcap 150 Index Fund

• The Tata Nifty Midcap 150 Index Fund - Direct (G) - NFO will passively track the Nifty Midcap 150 Index (TRI).
• Invests at least 95% of total assets in stocks comprising the index.
• May invest in debt or money market instruments for liquidity and expense needs.
• Seeks to maintain a low tracking error to ensure index alignment.
• Follows a buy-and-hold approach unless rebalancing is required.
• Uses derivatives for efficient portfolio management when necessary.

Risks Associated with Tata Nifty Midcap 150 Index Fund

• Tracking error may arise due to timing and price differences during trade execution.
• Illiquidity in certain midcap stocks can hinder exact index replication.
• Market volatility in the midcap segment may lead to capital loss.
• Inclusion/removal of stocks in the index could impact portfolio alignment.
• Investment in derivatives and debt instruments adds credit and interest rate risk.
• Economic downturns and regulatory changes may adversely affect midcap performance.

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Risk Mitigation Strategy by Tata Nifty Midcap 150 Index Fund

To minimise tracking error, the fund manager will closely monitor the portfolio and promptly rebalance it to mirror index changes. Incremental inflows and redemptions may be set off to maintain allocation integrity. Derivatives may be employed for efficient portfolio management, and the Tata Nifty Midcap 150 Index Fund - Direct (G) - NFO will maintain minimal cash to avoid deviation. The AMC will regularly monitor and report the tracking error, striving to keep it below 2% based on rolling one-year data. Additionally, swift deployment of cash and proactive handling of index changes will support performance alignment with the benchmark.

What Type of Investor Should Invest in Tata Nifty Midcap 150 Index Fund?

• Investors are looking for long-term capital appreciation through equity exposure.
• Those who prefer passively managed index-linked investments.
• Investors seeking midcap stock exposure without the risks of stock picking.
• Individuals aiming to diversify their portfolio via a cost-effective route.
• Investors with a moderate risk appetite and a multi-year investment horizon.