Invest in equal-weight index to reduce concentration risk: Analysts

Begin with a 50:50 allocation to Nifty50 & Nifty50 Equal Weight index fund

In 2019, the Indian equity market witnessed a narrow rally, led by the so-called HRITHIK stocks (HDFC, Reliance Industries, Infosys, TCS, HDFC Bank, ICICI Bank, and Kotak Mahindra Bank). At that time, the Nifty 50 Equal Weight Index underperformed the Nifty50.

However, the rally that ensued after the collapse of March 2020 was more broad-based. During this period, the Nifty 50 Equal Weight Index beat the Nifty50 handily (see table).

While Aditya Birla Sun Life Mutual Fund (MF) and DSP MF already have index funds based on the Nifty50 Equal Weight Index, HDFC’s new fund offer for a similar fund will begin