DSP Mutual Fund launches low cost flexicap index fund

DSP Mutual Fund has unveiled the DSP Nifty500 Flexicap Quality 30 Index Fund, marking a significant development as India’s first low-cost flexicap index fund. This innovative fund combines a quality-focused stock basket with dynamic market cap allocation, influenced by momentum signals.

The fund tracks the Nifty500 Flexicap Quality 30 Index, which selects 30 companies—10 each from large, mid, and small cap categories—based on rigorous criteria such as high return on equity (ROE), low debt, and consistent earnings growth. Each segment’s stocks are equally weighted, ensuring no single entity exerts undue influence.

This fund mirrors India’s first flexicap index, designed to aid investors in effectively navigating the fluctuating equity markets. DSP Mutual Fund highlighted that “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.”

By offering a systematic approach to investing across different market cap categories, this fund aims to provide investors with a robust tool for capitalising on market opportunities while maintaining cost efficiency.

In the broader context of the investment industry, DSP Mutual Fund’s latest offering represents an advancement in investment strategies by introducing a flexicap approach. This fund is poised to offer investors a means to diversify their portfolios without incurring high costs. By focusing on quality stocks across different market cap segments, DSP Mutual Fund is setting a benchmark for innovative investment solutions tailored to meet evolving market conditions and investor expectations, potentially impacting how funds approach product development in the sector.

“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. 

“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