The Equal Weight Index Fund is different from the traditional Nifty 50 index. In this, the stock of all sectors is given equal consideration. This will help investors in their choice.
Equal Weight Index Fund
There is a good chance for investors who want to earn through index shares. Actually Aditya Birla Sun Life has launched Nifty 50 Equal Weight Index fund. This is an open ended scheme. It will track only the Nifty 50 equal weight index. Therefore, the companies of all sectors in this index will be allocated 2%. Due to which the chances of earning profit will be more. This new fund offer is open on May 19 and will close on June 2. So what is equal weight index fund and how can one invest in it, know the whole process.
How is the equivalent weight index different?
The Nifty 50 Equal Weight Index Fund is different from the traditional index fund. The traditional Nifty 50 emphasizes market capitalization. There is more weightage in the index of those stocks whose companies have larger market capitalization. Whereas in the Equal Weight Index, the stocks of all the companies get equal space. In this index, all the constituent companies of the Nifty 50 index are allocated 2%.
Benefits of equal weight index
1. Stock level is wide in this, due to which investors get variety to choose stock.
2. In this, the risk of investment in individual stocks and overall sector level is reduced considerably.
3. The index is automatically re-formed every 6 months to conform to Nifty 50, allowing natural selection of top movers.
5.50 Large-cap companies can benefit from broad-based growth opportunities rather than relying on the performance of just a few large companies because of equal allocation.
Automatic booking benefits
Portfolios are organized on a quarterly basis in the Equal Index, which gives the advantage of automatic booking. Just as each stock in this index has a 2% allocation, if the allocation of a stock increases as a result of market action, the profit from the stock will automatically be credited to the account before the date of rebalancing.
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