Bajaj Allianz Life Insurance has introduced a new fund offer (NFO) -- Bajaj Allianz Life Mid Cap Index Fund -- to capture the growth opportunities presented by mid cap equities with a focus on providing investors with capital appreciation. This investment product is poised to deliver returns by investing in the constituents of the Nifty Midcap 150 Index, Bajaj Allianz Life Insurance said.

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The NFO period for the Bajaj Allianz Life Mid Cap Index Fund is set to conclude on November 28, 2023.

"The Bajaj Allianz Life Mid Cap Index Fund will be strategically diversified across a wide spectrum of stocks from the Nifty Midcap 150 Index. Transparency is another advantage offered by the fund, as it operates as an index fund. Investors can easily monitor the fund's portfolio and performance, making it an attractive option for those looking for a clear and straightforward investment," the fund house said.

Sampath Reddy, Chief Investment Officer at Bajaj Allianz Life Insurance, shared his insights on the fund's launch. He pointed out, "Historical data shows that mid-cap indices have helped in wealth creation for investors over the long term and managed to outperform the large-cap indices by a substantial margin. As of September 2023 end, the Nifty Midcap 150 index has delivered a return of 21.2% (CAGR) over a 10-year period, while the Nifty 50 index has returned 13.1% (CAGR) over the same period. Therefore, investors are realizing the need to diversify their portfolio and have exposure to different market-cap segments as per their risk profile and investment horizon."

However, on the flip side, investors considering this mid-cap index fund should be aware of the higher market risk and volatility associated with mid-cap stocks. Thus, the fund is better suited to investors with a higher risk appetite and a longer investment horizon. Historical data demonstrates that mid-cap indices tend to outperform in bull markets and may experience relatively higher drawdowns during market corrections, experts say.

Bajaj Allianz Life Insurance is not the first insurance company to launch an NFO. Insurance companies across India have been actively participating in the introduction of New Fund Offerings (NFOs), which represent opportunities for investors. These NFOs tap into high-growth sectors and emerging market trends, offering the potential for investors to achieve capital appreciation with returns as high as 25%.

Here's a look at some of the NFOs launched by insurance companies:

Vivek Jain, Head of Investments at Policybazaar.com, highlighted the significance of insurance companies' involvement in NFOs, stating, "The involvement of insurance companies in NFOs marks an evolution in the Indian investment space. Some of the compelling reasons why these NFOs represent the optimal choice for Indian investors are diversification and risk mitigation, risk-adjusted returns, alignment with emerging trends, and the added advantages of life cover and tax benefits."

"These NFOs introduced by insurance companies leverage their expertise in risk management to provide diversified investment options, effectively reducing the impact of market volatility. They prioritize risk-adjusted returns while seeking growth opportunities, catering to India's dynamic market conditions. Furthermore, these NFOs align with emerging economic trends and come with life insurance coverage and tax-saving benefits under Section 80C of the Income Tax Act, enhancing their overall appeal to investors," he told CNBC-TV18.com.

First Published:Oct 31, 2023 4:57 PM IST