DSP MF launches India's first Flexicap Quality-Only Index Fund: Details

DSP Nifty500 Flexicap Quality 30 Index Fund is an open ended scheme replicating / tracking Nifty500 Flexicap Quality 30 Index

DSP Mutual Fund on Thursday rolled out the DSP Nifty500 Flexicap Quality 30 Index Fund, India’s first low-cost flexicap index fund combining a quality-only stock basket with dynamic market cap allocation driven by momentum signals.

 

The fund tracks the Nifty500 Flexicap Quality 30 Index, which identifies 30 fundamentally strong companies—10 each from large, mid, and small caps—based on factors like high return on equity (ROE), low debt, and consistent earnings growth. Stocks within each segment get equal weight, ensuring no single company dominates.

 

This fund will mirror India’s first flexicap index, designed to help investors navigate shifting equity markets confidently.

 

"The new fund addresses the most common challenges faced by equity investors: identifying high quality stocks, automating optimal allocation to large, mid and small caps and doing all this at a low cost," DSP MF said in a statement. 

 

How It Works

Step 1 – Quality Filter: Only high-ROE, low-debt, earnings-growth stocks make it to the list.

 

Step 2 – Flexicap Momentum Allocation: The index checks the SMID-to-large-cap ratio against its 200-day moving average every quarter.

 

If small & midcaps (SMID) outperform, SMID allocation rises to 67%, large caps drop to 33%.

 

If large caps lead, allocations reverse.

 

Step 3 – Quarterly Rebalance: Fully rules-based, no human discretion.

 

Performance Track Record

Since October 2009, the index has delivered a CAGR of 18.1%, outperforming the Nifty 500 TRI’s 13.0%.

 

In volatile markets, quality focus has helped limit drawdowns.

 

Over rolling 5-year SIP periods, median returns were 20.3% vs. 15.8% for Nifty 500 TRI.

 

Why this matters for investors

Most retail investors struggle with timing markets and switching between large-, mid-, and small-cap funds—often hurting returns due to costs and taxes. This fund’s passive, rules-based structure removes the need for constant monitoring and avoids exit loads or tax outflows from switching strategies.

 

This  fund design is based on first principles, and investors benefit from investing in it as it removes the need to constantly monitor market segments or switch between schemes- something that most end up doing, incurring costs along the way. Its passive structure also means rebalancing occurs without tax outflow or exit loads, not typically available in DIY or actively managed flexi/multi-cap strategies.

 

“Two conditions are important for investors to achieve compounding - investing in high quality businesses at reasonable valuations. The quality factor is going through sharp price and time correction. We have always believed in launching funds when the strategy is in low cycle. Hence, we are introducing the first flexicap index fund which invests in 30 high quality companies across all market caps.” said Kalpen Parekh, Managing Director & CEO, DSP Mutual Fund.

 

“DSP Nifty500 Flexicap Quality 30 Index Fund brings together the best of both worlds, dynamic flexicap allocation and high-quality stock selection, using a transparent, rules-based approach. It’s designed to reduce noise, eliminate complexity, and help investors participate meaningfully across market cycles,” said Anil Ghelani, CFA – Head – Passive Investments & Products at DSP Mutual Fund.

 

For investors seeking all-weather equity exposure, this fund offers:

 

High-quality stock selection

 

Automatic market cap rebalancing

 

Low costs & tax efficiency

 

A proven performance track record