Zerodha Nifty 50 Index Fund NFO Opens on September 26, 2025

The Zerodha Nifty 50 Index Fund is an open-ended index fund launched by Zerodha Mutual Fund, aiming to provide investors with returns that closely correspond to the Nifty 50 Index TRI. It is a passively managed fund that invests primarily in equities and equity-related securities in proportion to their weight in the Nifty 50 Index, with a small portion allocated to debt and money market instruments to maintain liquidity. The scheme is designed for long-term wealth creation through stock market participation, and it offers investors the opportunity to enter at a minimal investment of ₹100. While the fund seeks to replicate the index performance, tracking errors may occur, and returns are not guaranteed.

Key Features of Zerodha Nifty 50 Index Fund

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• Opening Date: September 26, 2025
• Closing Date: October 10, 2025
• Exit Load: Nil
• Minimum Investment Amount: ₹100

Objective of Zerodha Nifty 50 Index Fund

The objective of the Zerodha Nifty 50 Index Fund - Direct (G) is to provide investors with returns that closely track the Nifty 50 Index TRI by investing in its constituent equities and replicating the index’s composition. The scheme aims to deliver market-linked returns, subject to minor tracking differences, and focuses on long-term capital growth rather than guaranteed income.

Investment Strategy of Zerodha Nifty 50 Index Fund

• Passively replicate the Nifty 50 Index by investing in stocks in proportion to their weight in the index.
• Allocate up to 5% of assets in debt and money market instruments to meet liquidity requirements.
• Use derivatives for hedging and portfolio balancing, without assuming leveraged exposure.
• Rebalance the portfolio regularly to minimise tracking error in line with SEBI timelines.
• Participate in stock lending up to 20% of net assets under strict regulatory guidelines.

Risks Associated with Zerodha Nifty 50 Index Fund

• Tracking Error Risk: Fund performance may differ from the index due to expenses, corporate actions, cash holdings, and liquidity issues.
• Market Risk: Equity investments are subject to market volatility and fluctuations.
• Liquidity Risk: Delays in buying or selling securities may affect returns.
• Derivative Risk: Hedging with derivatives can cause losses if markets move unfavourably.
• Operational Risk: Transaction and management expenses may impact fund returns.
• Regulatory Risk: Changes in regulations or index composition can affect investment outcomes.

Risk Mitigation Strategy by Zerodha Nifty 50 Index Fund

The NFO mitigates risks by closely tracking the Nifty 50 Index TRI and rebalancing the portfolio regularly to minimise tracking errors. Diversification across all index constituents ensures exposure is spread, reducing company-specific risks. Investments in debt and money market instruments help maintain liquidity. The AMC follows strict SEBI-prescribed investment restrictions and operates a robust enterprise-level risk management framework, monitored by the Risk Management Committee to address market, operational, and regulatory risks.

What Type of Investor Should Invest in Zerodha Nifty 50 Index Fund?

• Long-term investors seeking market-linked returns through passive equity exposure.
• Those with a low-cost investment preference in index funds.
• Investors are comfortable with stock market volatility and minor tracking errors.
• Individuals aiming for systematic investment via SIPs or lump sum contributions.

Where Will the Zerodha Nifty 50 Index Fund Invest?

• Equities and equity-related securities of companies included in the Nifty 50 Index.
• Debt and money market instruments for liquidity, including T-Bills and Tri-party Repo.
• Derivative instruments for hedging and portfolio balancing purposes.
• Stock lending up to 20% of net assets under regulatory limits.