Zerodha is launching two new funds: Zerodha Nifty LargeMidcap 250 Index Fund and an ELSS variant, Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund. There are two aspects to consider: (1) The index and (2) the ELSS variant.
The Nifty LargeMidcap 250 Index is 50% of Nifty 100 + 50% of Nifty Midcap 150. This covers nearly 85% of all the traded equity stocks at NSE. This makes it distinctly different from the Groww Nifty Total Market Index Fund. The total market fund is entirely capitalization-weighted.
In the LargeMidcap 250 index, the aggregate weight of large and mid cap stocks is capped at 50% each (quarterly reset). Within each segment, the stocks are weighted by free-float market capitalization. So, this certainly increases the risk, but the reward is neither proportional nor guaranteed.
When the mid caps soar, this fund would look like a great investment; when they don’t, it would seem a terrible place to be in. The graph below shows 2130 10-year rolling return data points of Nifty LargeMidcap 250 TRI vs Nifty Midcap 150 TRI vs Nifty 50 TRI.
From time to time (no one can predict when), the excess return of the large midcap 250 index, when compared to the Nifty 50, reduces to zero. If we consider the task of tracking 250 stocks, the fund may or may not outperform a Nifty 50 index fund in future.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
🔥Enjoy massive discounts on our robo-advisory tool & courses! 🔥
At the time of writing, only three funds track this index -these two NFOs from Zerodha and a nearly two-year-old fund from Edelweiss (the AMCs Nifty Bank ETFs were merged with the index fund in July 2023).
Our recommendations:
- The New Tax Regime has made section 80C instruments redundant. So you can skip the Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund. See: Can I continue investing in ELSS mutual funds in the next financial year?
- If your portfolio (not you!) has an actual need for such a fund (most portfolios are already so cluttered that they resemble an expensive index fund), you can consider investing in Zerodha Nifty LargeMidcap 250 Index Fund (there is not much history in this space so might as well pick the NFO).
- However, don’t expect a joy ride. It comes with significant volatility compared to the Nifty or Sensex, which may or may not translate into more returns.
Please note: We are not suggesting that you invest in this fund. We suggest that if your portfolio has an actual need for this fund. (please evaluate this first), then you can consider his fund if you understand the risks. This tool may be of help: A new tool to compare five MF portfolios to find overlapping stocks.
🔥Enjoy massive discounts on our courses, robo-advisory tool and exclusive investor circle! 🔥& join our community of 7000+ users!
Use our Robo-advisory Tool for a start-to-finish financial plan! ⇐ More than 2,500 investors and advisors use this!
Track your mutual funds and stock investments with this Google Sheet!
We also publish monthly equity mutual funds, debt and hybrid mutual funds, index funds and ETF screeners and momentum, low-volatility stock screeners.
- Do you have a comment about the above article? Reach out to us on Twitter: @freefincal or @pattufreefincal
- Have a question? Subscribe to our newsletter using the form below.
- Hit 'reply' to any email from us! We do not offer personalized investment advice. We can write a detailed article without mentioning your name if you have a generic question.
Join 32,000+ readers and get free money management solutions delivered to your inbox! Subscribe to get posts via email! (Link takes you to our email sign-up form)
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter(X), Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 3,000 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 700 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
Our new book for kids: “Chinchu Gets a Superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook is for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Do you want to check if the market is overvalued or undervalued? Use our market valuation tool (it will work with any index!), or get the Tactical Buy/Sell timing tool!
We publish monthly mutual fund screeners and momentum, low-volatility stock screeners.
About freefincal & its content policy. Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on mutual funds, stocks, investing, retirement and personal finance developments. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified with credible and knowledgeable sources before publication. Freefincal does not publish paid articles, promotions, PR, satire or opinions without data. All opinions will be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our YouTube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions and seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, and how travelling slowly is better financially and psychologically, with links to the web pages and hand-holding at every step. Get the pdf for Rs 300 (instant download)