Quantum Mutual Fund has announced the launch of Quantum Nifty 50 ETF Fund of Fund. It is an open-ended fund of fund (FoF) scheme investing in units of Quantum Nifty 50 ETF. The scheme is India’s first of its kind Nifty 50 ETF Fund of Fund.
The New Fund Offer (NFO) opened today (July 18, 2022) and will close on August 1, 2022. The scheme will re-open for subscription and redemption on an ongoing basis from August 10, 2022.
Before we proceed, let us first deconstruct the concept of a new fund offer and fund of funds.
New Fund Offer
A New Fund Offer (NFO) is the process through which an asset management company (AMC) creates a new fund on a first-subscription basis to facilitate the purchase of securities.
The fund house collects funds from the general public through an NFO in order to buy securities such as equity shares, bonds, and other financial instruments on the market. As a newcomer to the market, NFO is less expensive than the current funds.
Fund of Funds
A Fund of Funds (FoF) is a pool of funds brought together to invest in other funds, generally mutual and hedge funds, rather than directly investing in securities. In simpler terms, FOF is a mutual fund scheme that invests in other mutual funds. This has multiple benefits and is most suited to risk-averse investors with small capital.
Fund Overview
According to the fund house, Quantum Nifty 50 ETF Fund of Fund is India’s first-of-its-kind Nifty 50 ETF Fund of Fund. This fund combines the efficiency of an ETF with the convenience of an index fund, giving investors the best of both world’s.
Quantum Nifty 50 ETF FOF is one of the most convenient ways to invest in India’s Nifty Top 50 without opening a DEMAT account. This fund will invest in the units of Quantum Nifty 50 ETF, a passive scheme in the array of Quantum Solutions with a track record of 14 years and counting, said in release.
Fund Objective
The investment objective of the scheme is to provide capital appreciation by investing in units of Quantum Nifty 50 ETF - Replicating / Tracking Nifty 50 Index. Though, there is no assurance or guarantee that the investment objective of the scheme will be achieved, the fund house added.
Fund Features
- First of its kind Nifty 50 ETF wrapper fund
- Low tracking error of underlying fund.
- No Demat Account required.
- Diversified portfolio across top Nifty 50 in different sectors.
- Invest with as low as Rs.500.
Top 10 holdings of Quantum Nifty 50 ETF
| Name of Instrument | Industry | % to NAV |
| Reliance Industries limited | Petroleum products | 12.95% |
| HDFC bank limited | Banks | 8.53% |
| Infosys limited | IT- Software | 7.70% |
| ICICI bank limited | Banks | 7.09% |
| HDFC limited | Finance | 5.68% |
| Tata consultancy services limited | IT- Software | 4.88% |
| Kotak mahindra bank limited | Banks | 3.51% |
| ITC Ltd | Diversified FMCG | 3.46% |
| Hindustan Unilever limited | Diversified FMCG | 2.88% |
| Larsen and toubro limited | Construction Project | 2.71% |
Note: Stocks referred above are part of Nifty 50 index as on June 30, 2022 and not recommended by Quantum Mutual Fund/AMC. The Fund may or may not have any present or future positions in these Stocks.
Quantum Nifty 50 ETF Fund of Fund
| Instruments | Indicative Asset Allocation(% to total assets) | Risk Profile | |
| Minimum | Maximum | High/medium/low | |
| Units of Quantum Nifty 50 ETF | 95 | 100 | High |
| Government securities & T.bill Maturity upto 91 days, Tri-party repo and liquid schemes of mutual funds | 0 | 5 | Low |
Note: The above asset allocation is only indicative and may change from time to time, keeping in view the market conditions and applicable rules and regulations.
Hitendra Parekh is the Fund Manager for the scheme. He has been managing Quantum Nifty 50 ETF since its inception from July 10th, 2008.
“With this new fund offering, Quantum Mutual Fund continues to dive deeper into the passive space, offering investors, ease of investment and diversification in a single product. This hassle-free option can help one to plan for long-term goals," said Parekh.
Chirag Mehta, CIO- Quantum Mutual Fund said, “Investors can build their investment portfolio by adopting a passive approach in Quantum’s DIY 12-20-80 Asset Allocation Strategy. This strategy has the potential to minimize downside risks and achieve your long-term goals.”
“As per this strategy investors dedicate money worth 12 months of their expenses in a liquid fund and 20% of your investable money to gold, the rest 80% can be allocated to equity. Investors can allocate 85% of their equity investments to Quantum Nifty 50 ETF Fund of Fund, while the rest 15% can be allocated to Quantum India ESG Equity Fund,” he added.
