If you want to invest in the stock market, you might have heard about the UTI Nifty 50 Index Fund – Growth. But what is it exactly?
Well, it is a type of mutual fund that invests your money in the Nifty 50 Index, a group of 50 of India’s largest and most financially stable companies.
Investing in this fund can earn a profit as the value of the companies in the index rises. So, if you are interested in investing in the stock market and want to learn more about this fund, keep reading.
Large Cap Mutual Funds are Equity Mutual funds that invest in Large Cap Stocks (companies) and other securities like bonds, fixed income assets, etc. Large Cap companies are categorized as India’s leading 100 companies as per Market Capitalization.
On average, these 100 companies will be stable in business, revenue, profit, and market capital of more than 20,000 Crores. So, these Large-cap companies provide a consistent share price (capital gain) return.
Many investors tend to choose Large-cap stocks over mid or small-cap companies. At the same time, indices like SENSEX, Nifty 50, Nifty Next 50, Nifty 100 hold these top 100 stocks. It provides a 12-16% nominal return, depending on the performance. Still, if you invest in Large Cap Mutual funds, then you should at least (minimum) hold your investments for 5 years.
Here is the complete listing of the 10 best Large Cap Mutual Funds in India in 2023. We draft this list post multiple analyses on the following parameters,
- AUM (Asset Under Management)
- 5 Years Performance.
- Volatility against Index
- Expense Ratio
- Percentage of equity holdings.
Returns (Nav As On 31st March, 2023):
The UTI Nifty 50 Index Fund – Growth is a type of mutual fund that invests in the Nifty 50 Index, which comprises the top 50 companies listed on the National Stock Exchange of India (NSE).
The performance of the fund is measured by the Net Asset Value (NAV), which represents the total value of the assets held by the fund divided by the total number of units outstanding.
It has historically delivered competitive returns to its investors. As of 31st March 2023, the return of the fund was around 3.52%.
Also, investing in mutual funds involves risk, and investors should carefully consider their investment objectives, risk tolerance, and other factors before making any investment decisions.
SIP Returns (Nav As On 31st March, 2023):
The SIP (Systematic Investment Plan) returns of UTI Nifty 50 Index Fund – Growth would depend on the specific period during which the SIP was made and the amount of the investment.
However, based on historical data, the fund has delivered competitive returns to investors who have opted for the SIP mode of investment.
For example, if you had started a SIP of Rs. 5,000 per month in UTI Nifty 50 Index Fund – Growth five years ago, your total investment would have been Rs. 3 lakhs and the value of your investment as of 31st March 2023 would have been around Rs. 4 lakhs. This represents an annualized return of around 12.42%.
It is important to note that these are just examples, and the returns of the fund may vary based on market conditions and other factors.
Investors should also remember that mutual fund investments are subject to market risks, and past performance may not indicate future results.
It is always advisable to consult with a financial advisor before making any investment decisions.
Tax Treatment:
The tax treatment for UTI Nifty 50 Index Fund – Growth depends on the investor’s holding period and the type of account in which the investment is held.
If the investment is held for less than one year, it is considered a short-term capital gain, and the gains are taxed at the applicable income tax rate of the investor.
As of the current tax laws in India, short-term capital gains on equity mutual funds are taxed at a rate of 15%.
If the investment is held for over a year, it is considered a long-term capital gain. As of the current tax laws in India, long-term capital gains on equity mutual funds are taxed at a rate of 10% if the gains exceed Rs. 1 lakh in a financial year.
In addition to the capital gains tax, investors may also be subject to the Securities Transaction Tax (STT) on the purchase and sale of units of the fund. The STT is levied at a rate of 0.001% of the transaction value.
Portfolio (Updated On 28th Feb,2023):
Risk Ratios:
The risk ratios for UTI Nifty 50 Index Fund – Growth provide investors with a measure of the volatility and risk associated with the fund’s returns compared to its benchmark index, the Nifty 50 Index. The following are some of the key risk ratios for the fund:
Standard Deviation:
The standard deviation measures the volatility of the fund’s returns. The higher the standard deviation, the higher the volatility of the returns.
Beta:
The beta measures the sensitivity of the fund’s returns to changes in the benchmark index. A beta of 1 indicates that the fund’s returns align with the benchmark index.
Sharpe Ratio:
The Sharpe ratio measures the excess return earned by the fund per unit of risk taken. A higher Sharpe ratio indicates better risk-adjusted returns.
Sortino Ratio:
The Sortino ratio measures the excess return earned by the fund per unit of downside risk taken. It is similar to the Sharpe ratio but only considers the downside risk. A higher Sortino ratio indicates better risk-adjusted returns.
Alternative Funds (Category Peers):
Alternative funds are a category of mutual funds that invest in assets other than traditional equity and fixed-income securities.
These may include commodities, derivatives, real estate, and infrastructure, among others. These funds are considered relatively more complex than traditional mutual funds.
They are suitable for investors with a higher risk appetite willing to take on higher volatility in pursuit of potentially higher returns.
When comparing UTI Nifty 50 Index Fund – Growth with its category peers, a few funds fall under the alternative funds category.
However, it is important to note that these funds may have different investment objectives and strategies than UTI Nifty 50 Index Fund – Growth. Hence, the comparison may not be apples-to-apples.
Some of the alternative funds that can be considered as category peers for UTI Nifty 50 Index Fund – Growth are:
- Aditya Birla Sun Life Equity Hybrid ’95 Fund
- ICICI Prudential Balanced Advantage Fund
- Kotak Equity Hybrid Fund
- HDFC Hybrid Equity Fund
- SBI Equity Hybrid Fund
Again, it is important to note that these funds may have different investment objectives and strategies.
Hence, investors should carefully review the fund’s investment objectives, risk factors, and portfolio holdings before making investment decisions.
It is always advisable to consult with a financial advisor before making any investment decisions.
More Funds from UTI Mutual Fund:
UTI Mutual Fund is a leading mutual fund company in India that offers a variety of investment schemes to investors.
One of the ways in which UTI Mutual Fund raises money for its investment schemes is by collecting funds from investors in the form of contributions.
When UTI Mutual Fund collects funds from investors, it pools them together to create a fund corpus, which is then invested in various financial instruments like stocks, bonds, and other securities.
The returns earned from these investments are then passed on to the investors in proportion to their contribution.
If UTI Mutual Fund is looking to raise more funds, it may launch new investment schemes or promote existing schemes to attract more investors.
The company may also conduct marketing campaigns to increase awareness about its investment schemes and their potential benefits.
In addition to these methods, UTI Mutual Fund may explore partnerships with financial institutions or introduce innovative features in its investment schemes to attract more investors.
For example, the company may launch investment schemes with lower minimum investment amounts or offer better returns for longer-term investments.
Expense Ratio, Exit Load And Tax:
The expense ratio, exit load, and tax are important concepts that investors must understand when investing in mutual funds.
They are important factors that investors need to consider when selecting mutual funds. It is important to carefully evaluate these factors before investing and to consult with a financial advisor or tax professional to ensure that the investment aligns with the investor’s goals and financial situation.
Expense Ratio: 0.20%:
Expense ratio is a fee mutual fund companies charge for managing the fund. It includes various expenses such as administrative costs, management fees, and other operating expenses.
The expense ratio is expressed as a percentage of the fund’s total assets, and it can significantly impact the returns generated by the fund.
An expense ratio of 0.20% means that for every Rs.100 invested in the fund, the mutual fund company will charge Rs.0.20 as an expense. This means that the investor’s returns will be reduced by 0.20% due to the expense ratio.
An expense ratio of 0.20% is considered relatively low compared to the industry average. Lower expense ratios can benefit investors by increasing their net returns on investment.
However, investors should not solely focus on the expense ratio when selecting mutual funds. Other factors such as fund performance, risk, and diversification also play an important role in investment decisions.
It is important to note that the expense ratio may vary for different mutual fund schemes and asset classes. Some schemes may have higher expense ratios due to higher management fees or higher operating costs.
Therefore, investors should carefully evaluate the expense ratio for each mutual fund scheme before investing and ensure that it aligns with their investment objectives and risk tolerance.
Exit Load:
Exit load is a fee mutual fund companies charge when investors redeem their investments before a specified period. The purpose of an exit load is to discourage short-term trading and encourage long-term investment.
They are expressed as a percentage of the redemption value, and the rate varies from fund to fund.
For example, if a mutual fund has an exit load of 1% and an investor redeems Rs.10,000 worth of units, the mutual fund company will deduct Rs.100 as an exit load fee.
The exit load may vary depending on the holding period and the type of mutual fund. Some mutual funds may have higher exit loads for shorter holding periods, while others may have no exit loads at all.
The exit load period can range from a few days to a few years, and investors should carefully evaluate the exit load for each mutual fund scheme before investing.
It is important to note that exit loads can significantly impact the returns generated by the mutual fund. Therefore, investors should carefully consider the potential impact of the exit load before redeeming their investments.
In some cases, waiting until the exit load period has ended may be more beneficial before redeeming the investment.
Investors should also be aware that exit loads may be waived under certain circumstances, such as in the event of the investor’s death or case of an emergency.
Stamp Duty:
Stamp duty is a tax levied on various financial transactions, such as the sale and purchase of securities, bonds, mutual funds, and other financial instruments.
It is a legal requirement mandated by the government to be paid by individuals or entities involved in the transaction.
In the context of mutual funds, stamp duty is charged on purchasing units. The stamp duty rate may vary from state to state, and the rate is usually a small percentage of the transaction value.
For example, if an investor purchases Rs.10,000 worth of units in a mutual fund and the stamp duty rate is 0.005%, then the stamp duty payable would be Rs.0.50.
The investor usually pays stamp duty at the time of purchase, and it is important to note that it is an additional cost not included in the expense ratio of the mutual fund.
Therefore, investors should carefully evaluate the impact of stamp duty on their investment returns.
It is important to note that stamp duty is a legal requirement, and failure to pay it can result in penalties and legal consequences.
Tax Implication:
Tax implication is the impact of various taxes on an individual’s investment returns. In the context of mutual funds, there are several taxes that can impact an investor’s returns, including capital gains tax, dividend distribution tax, and securities transaction tax.
Capital gains tax is levied on the gains realized from the sale of securities or mutual fund units. The rate of capital gains tax depends on the holding period of the investment.
If the investment is held for less than one year, it is considered a short-term capital gain, and the tax rate is higher than for long-term capital gains, which are gains realized on investments held for more than one year.
Dividend distribution tax is a tax levied on the dividends paid by mutual fund schemes. The rate of dividend distribution tax may vary depending on the type of mutual fund scheme and the category of the investor.
Securities transaction tax is levied on purchasing and selling securities or mutual fund units. The rate of securities transaction tax may vary depending on the type of security or mutual fund and the transaction value.
Investors should carefully evaluate the tax implications before investing in mutual funds. It is important to note that the tax implications may vary depending on the investor’s income tax bracket, residency status, and other factors.
To optimize their returns, investors may consider investing in tax-efficient mutual fund schemes, such as equity-linked savings schemes (ELSS), which offer tax benefits under section 80C of the Income Tax Act, or debt mutual funds are taxed at a lower rate than other investment options.
Fund Management:
Fund management is the process of managing a mutual fund portfolio to achieve the fund’s investment objectives. It involves making investment decisions, managing the portfolio’s assets, and monitoring the performance of the portfolio.
The fund manager is responsible for managing the mutual fund and making investment decisions on behalf of the investors.
The fund manager’s role is critical in achieving the mutual fund’s investment objectives. The fund manager analyzes market trends, economic data, and other relevant factors to determine the best investment opportunities for the fund.
They are also responsible for selecting securities for the mutual fund portfolio, deciding on the allocation of assets, and determining the risk level of the portfolio.
The fund manager’s goal is to maximize returns while minimizing risk. To achieve this, the fund manager may use various investment strategies, such as diversification, asset allocation, and active management.
The fund manager may also consider multiple factors, such as the fund’s investment objective, market conditions, and the performance of individual securities.
Investors in a mutual fund entrust their investment decisions to the fund manager. Therefore, it is important to carefully evaluate the fund manager’s track record, investment strategy, and experience before investing in a mutual fund.
A good fund manager can make a significant difference in the performance of the mutual fund.
It is important to note that fund management involves costs, such as management fees, which are reflected in the expense ratio of the mutual fund.
Investors should carefully evaluate the expense ratio of a mutual fund before investing and consider the impact of the fees on their investment returns.
Fund House & Investment Objective:
A fund house is a company that manages and operates mutual fund schemes. The fund house is responsible for managing the mutual fund and ensuring that the fund meets its investment objectives.
The fund house may offer other investment products, such as portfolio management services, alternative investments, and retirement planning solutions.
The investment objective of a mutual fund is the primary goal of the fund, and it defines the type of investments the fund will make.
The investment objective of a mutual fund may vary depending on the fund’s category and the fund house’s philosophy.
For example, an equity mutual fund’s investment objective may be to invest in stocks with the potential for long-term growth, while a debt mutual fund’s aim may be to invest in low-risk, fixed-income securities.
The investment objective of a mutual fund is usually stated in the fund’s prospectus. It may include factors such as the fund’s investment horizon, the targeted level of risk, and the expected rate of return.
The investment objective provides investors with an understanding of the fund’s goals and helps them to evaluate whether the fund aligns with their investment objectives and risk tolerance.
Investors should carefully evaluate the investment objective of a mutual fund before investing to ensure that the fund aligns with its investment goals and risk profile.
It is also important to consider other factors, such as the fund’s historical performance, the fund house’s track record, and the expense ratio of the mutual fund.
A good understanding of the fund’s investment objective and investment philosophy can help investors make informed investment decisions and achieve their financial goals.
Comparison with Large Cap Index Funds:
Investors can choose between actively managed funds and index funds when investing in mutual funds.
Large-cap index funds are a passive investment strategy that tracks the performance of a specific index, such as the Nifty 50 or the BSE Sensex, by investing in the underlying securities of the index in the same proportion as the index.
These funds typically have a lower expense ratio than actively managed funds. The fund manager is not required to make investment decisions, and the index determines the fund’s investments.
This can result in higher returns for investors, as lower expenses can boost the fund’s net returns.
However, actively managed large-cap mutual funds have the potential to outperform index funds, as the fund manager has the flexibility to select individual securities based on their analysis of the market and company fundamentals.
This may result in higher returns for investors and expenses due to the fund manager’s expertise and research.
Conclusion:
UTI Nifty 50 Index Fund – Growth offers investors a simple and effective way to invest in the Indian equity market. By tracking the performance of the Nifty 50 index, the fund offers broad exposure to the top 50 companies in India.
It provides a convenient option for investors seeking a passive investment strategy. With a low expense ratio and no exit load, the fund offers investors an affordable and flexible investment option.
Whether you are a new investor or a seasoned professional, UTI Nifty 50 Index Fund – Growth is worth considering for your investment portfolio.
Frequently Asked Questions (FAQs):
No, there is no exit load for UTI Nifty 50 Index Fund – Growth, making it a flexible investment option for investors.
UTI Nifty 50 Index Fund – Growth is a passive investment strategy that tracks the performance of the Nifty 50 index. At the same time, other mutual funds may be actively managed and invested in a wider range of securities.
The Nifty 50 index is a benchmark index of the National Stock Exchange (NSE) in India that comprises the top 50 companies listed on the NSE.
UTI Nifty 50 Index Fund – Growth is a mutual fund that tracks the performance of the Nifty 50 index by investing in the underlying securities of the index in the same proportion as the index.
