Should you consider a fund following 1,000 shares?

Copyright © HT Digital Streams Limit all rights reserved. Money an index fund linked to the BSE 1000, investors can be exposed to more sectors and businesses. However, diversification can have a limited impact on returns and risks above a certain point. (Reuters) Summary Historically, the BSE 1000 index only fared the BSE 500 slightly better, but the better performance of the performance of the new Fund of the Nifty 50. Motilal Oswal Asset Management Company – Motilal Oswal BSE 1000 Index Fund – will be passive and the new BSE will be 1000. But should investors consider putting their money into a fund that detects an index of 1,000 shares? Let’s look at the numbers first. BSE 1000 vs BSE 500 Motilal Oswal’s new fund will invest in BSE 1000 shares according to their weight in the index. As a result, the historical performance of the index may indicate how Motilal Owal’s fund can perform compared to other index funds. Over the past ten years, the BSE has produced 1000 index annual returns of 13.42%, slightly better than the BSE 500’s yields of 13.17% over the same period. Their returns are also the same over three years and five years of periods. Over a three -year period, the BSE produced 1000 returns of 14.17%, and the BSE 500, 13.75%. Over five years, the BSE yielded 1000 returns of 26.92% compared to the BSE 500’s 26.3%. These are all total returns for returns, which acquire both price appreciation and dividend gain from the constituent shares. The BSE 1000’s better performance over the BSE 500 is only marginal. This can be attributed to market weight indices, which means that companies with larger market cap dominates the returns. The total market cap of the BSE 500 is £ 379 trillion, which is 94% of the total market cap of the BSE 1000 index. In terms of yields, which are measured as standard deviation, the numbers are more or less the same in three years, five years and ten years for both indices. BSE 1000 vs Nifty 50 The differences here are slightly more expressed in favor of the 1000 stock index. The BSE 1000’s 10-year annual returns of 13.42% are higher than the Nifty 50s 12.28%. Over a five -year period, the Nifig 50 yields clocked 23.52%, lower than the yields of 26.92%of BSE 1000. Over three years, the Nifty yielded 50 12.27%compared to the BSE 1000s 14.17%. However, the Nifty 50 has a lower volatility, with a standard deviation of 16.06% against the BSE 1000’s 20.18%. What should investors do? A broad market index such as BSE 1000 can be an alternative way for investors to participate in the middle and small cap stocks, while ensuring a lower volatility than that of the middle and small cap. “Today’s small cap was micro captain of yesterday. Such a fund allows investors to participate from the lowest point of (the) market cap spectrum to the highest,” says Kavitha Menon, founder of Probitus Wealth. “As the size of the market and the market’s market caps grow, there is a need for a product that enables retail to participate in an otherwise high -risk space such as small cap.” Ravi Kumar TV, co-founder of the acquisition of land investment services, said the BSE 1000 index would be exposed to investors to more sectors and businesses that would not be higher in the market capital chain. “Investors get more sectors to participate in (the) BSE 1000 index. Nifty 50 or BSE Sensex 30 index returns can be strongly affected by (the) performance of one or two index heavyweights,” he said. But while diversification is usually a good idea, it can have a limited impact on returns and risks above a certain point. Investors looking for a broad, passively managed fund, the Motilal Owal BSE can consider 1000 index fund. However, it can or not significantly better than other index funds linked to the BSE 500 or Nifty 500. Investors who have already built a passive fund portfolio with Nifty 50, BSE 500 or Nifty 500 index funds can stick to it. Those who start their investment journey may consider the BSE 1000 index fund to get a taste of the stock markets. Catch all the business news, market news, news reports and latest news updates on Live Mint. Download the Mint News app to get daily market updates. More Topics #Motilal Oswal #Investment Strategy #Index Funds #Financial Planning Mint Special