A look at Groww’s Nifty Total Market Index Fund: Pros and Cons

Date : 16/09/2023
Read: 3 mins

Groww recently announced the launch of its unique Nifty Total Market Index Fund, which may prove to be great investment opportunity. Here are its pros and cons.

Nifty Total Market Index Fund

Also Read: Nifty Index Achievements in 2023

Index funds are a popular means of investment, promising stable returns with low risk. The Nifty Total Market Index Fund is a new entrant in the world of index funds.

Groww, the famous online broking firm, has been granted approval to launch its first index fund by the Securities and Exchange Board of India (SEBI). The fund will be launched as an NFO (New Fund Offering) soon.

Interestingly, this development comes just a few days after its rival, Zerodha Asset Management announced the launch of its two passive index fund schemes: The Zerodha Nifty Large Midcap 250 Index Fund and The Zerodha Tax Saver (ELSS) Nifty Large Midcap 250 Index Fund.

On launch, the Groww Nifty Total Market Index Fund will be sui generis.

Highlights

The Nifty Total Market Index was launched in October 2021 with a base date of 1st April 2005
Groww Nifty Total Market Index Fund will be India’s first passive scheme that gives weightage to 750 stocks spread across all market capitalizations
It includes all stocks in the Nifty 500 and the Nifty Microcap 250
Compared to the Nifty 50s 9.53% returns, the Nifty Total Market Index provided returns of 11.37%. for the period ended August 31
The Top 10 companies in the index are the same as the Nifty 50 Top 10 stocks with HDFC Bank, Reliance Industries, ICICI Bank, holding the largest shares
The weightage that each stock gets depends on the free-float market capitalisation of that stock

What are the pros and cons of investing in the Total Market Index Fund?

Pros:

Diversification: Diversification is the key to minimise risks. By tracking the performance of the top 750 stocks of the entire Indian stock market across capitalizations, the fund spreads out the risks associated with each individual investment and reduces the impact of poor-performing stocks on your overarching portfolio. It also offers safe, passive exposure to mid and small cap indices.
Cost Efficiency: By virtue of being a passively managed fund, index funds have lower expense ratios, thus improving your returns in the long run.
Long-Term Growth: Historically, the Indian stock market has always been on a growth trend. If you invest in the Nifty Total Market Index Fund, you get to be a part of India’s active growth journey.

Cons:

With exposure to mid and small cap stocks, the fund may be set for a hit in case of adverse market conditions. According to some analysts, the fund is best suited for novice investors who may not be well aware of market basics.

Also Read: SEBI’s Approval for Groww

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