Risk-tolerant, long-term investors may hold these in satellite portfolio

EW index-based funds can be more volatile due to exposure to smaller companies

Mirae Asset Nifty 50 Equal Weight (EW) Exchange Traded Fund’s (ETF’s) new fund offer closed on May 6. Several fund houses, including SBI, HDFC, ICICI, Kotak, Nippon, DSP, and Motilal Oswal already offer schemes based on EW indices.

 

USP of these funds

 

In market capitalisation-weighted index funds, larger companies receive greater weight. “An EW index-based fund assigns the same weight to each stock in the index, regardless of their market cap size,” says Chintan Haria, principal–investment strategy, ICICI Prudential Mutual Fund. In market cap indices, large companies dominate performance.

 

These funds are value or contrarian oriented, whereas market cap-weighted funds