Groww Nifty Total Market Index Fund, the first offering from Groww Mutual Fund, opened for subscription on Tuesday, October 3. The new fund offer (NFO) will be available till October 17, 2023. This is an open-ended scheme replicating/tracking the Nifty Total Market Index. Notably, this is India's first Total Market Index fund.

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The Nifty Total Market Index represents around 96 percent of the NSE's total market capitalisation, compared to the 49 percent covered by the NIFTY 50.

Understanding the fund

The Groww Nifty Total Market Index Fund aims to provide investors with the opportunity to participate in the Indian stock market comprehensively. It seeks to replicate the performance of the Nifty Total Market Index, which includes approximately 750 stocks across large, mid, and small-cap segments. Large-cap stocks make up 72.03 percent of the index's weightage, with the remaining 27.97 percent allocated to mid, small, and microcap stocks.

This composition is designed to strike a balance between the stability of large-cap companies and the growth potential of mid and small-caps, according to the fund document.

Investment objective and considerations

The primary investment objective of the scheme is to achieve a return equivalent to the Nifty Total Market Index-TRI, subject to tracking error. However, it's essential to note that no assurance or guarantee exists that the scheme will achieve this objective, and it does not assure or guarantee any returns. As an open-ended fund, it offers liquidity through purchases and redemptions at prices related to the applicable net asset value (NAV) on each business day, with redemption amounts starting at Rs 500.

Plan options

Investors have two plan options to choose from: the regular and the direct plans. The regular plan is for investors who wish to route their investment through a distributor, while the direct plan is exclusively for those who purchase/subscribe units directly with the mutual fund, the fund document said.

Distribution options

Under both plan options, investors can select from various distribution options, including growth, Payout of Income Distribution cum Capital Withdrawal (IDCW), and reinvestment of IDCW. The NAVs of these options will be different and separately declared.

SIP, SWP, STP, and more

The fund offers the convenience of SIP (Systematic Investment Plan), SWP (Systematic Withdrawal Plan), and STP (Systematic Transfer Plan) for investors. SIPs can be set up on any date from the 1 to the 28 of a given month or quarter. SWP and STP are available on a daily, weekly, monthly, and quarterly basis.

Pricing and minimum investment

The New Fund Offer (NFO) price is set at Rs 10 per unit. For initial purchases (non-SIP), the minimum investment is Rs 1,000 and in multiples of Re 1. Additional purchases (non-SIP) require a minimum of Rs 500 and multiples of Re 1. SIPs start at Rs 1,200, subject to a minimum of 12 SIP instalments of Rs 100 each for monthly investments and Rs 300 for quarterly investments.

Load structure

During the NFO and continuous offer period, there is no entry load charged on purchases, additional purchases, or switches. The commission, if any, is to be paid directly by the investor to the distributor.

Asset allocation and risk profile

The fund's asset allocation primarily consists of equities and equity-related securities covered by the Nifty Total Market Index, ranging from 95 percent to 100 percent of total assets. This allocation results in a very high-risk profile. Additionally, the fund may allocate 0 percent to 5 percent of its assets to debt and money market instruments, contributing to a low to medium-risk profile.

(Source: Fund document)

Investment strategies

The Groww Nifty Total Market Index Fund will be managed passively, investing in stocks based on their weights in the Nifty Total Market Index. The investment strategy revolves around minimising tracking error through portfolio rebalancing, considering changes in stock weights in the index and incremental collections/redemptions from the scheme.

The fund's designated manager will be responsible for day-to-day investment decisions, including asset allocation, security selection, and timing of investments.

Conclusion: To invest or not?

As India's first Total Market Index Fund, the Groww Nifty Total Market Index Fund offers investors an opportunity to gain comprehensive exposure to the Indian stock market. Its low load structure and various distribution and investment options make it a flexible choice.

However, it's crucial to remember that investing always carries inherent risks. While the fund aims to replicate the Nifty Total Market Index, there is no history to track the performance.

Before investing, individuals should carefully consider their investment objectives, and risk tolerance, and consult with a financial advisor if necessary. Furthermore, investors should closely study the fund's offer document and related materials to make an informed decision, experts say.

(Edited by : Amrita)