HDFC AMC launches 2 new ETFs with exposure to large cap stocks | What you need to know about these Exchange-Traded Funds

HDFC Asset Management Company (AMC) has launched two new ETF funds. The investment manager to HDFC Mutual Fund (HDFC MF), the third largest mutual fund house after SBI Mutual Fund and ICICI Bank Mutual fund, has added HDFC NIFTY Next 50 ETF and HDFC NIFTY 100 ETF with a view to expand their suite of “HDFC MF Index Solutions.”  

These are open-ended schemes replicating/tracking the NIFTY Next 50 Index and NIFTY 100 Index, respectively. These funds offer a simple way to gain exposure to the Indian large cap space. The captioned NFOs will open on July 25, 2022, and close on August 1, 2022 

The benchmark of HDFC NIFTY Next 50 ETF – NIFTY Next 50 Total Returns Index (TRI) offers diversification benefits at stock and sector level, while providing potential for higher risk-adjusted returns vs NIFTY 50 in the long term.  

Further, this index offers higher potential for growth as it could contain the next league of NIFTY50 constituents. 

"The benchmark of HDFC NIFTY 100 ETF – NIFTY 100 TRI offers a simple way to gain exposure to the Indian large cap space by focusing on top 100 companies based on full market capitalization*, thus giving better market representation. It provides more balanced diversification than NIFTY 50 Index, while tracking the behaviour of the combined portfolio of NIFTY 50 and NIFTY Next 50 Indices," HDFC Mutual Fund said in a statement.  

The objective of the funds is to provide investment returns that, before expenses, closely correspond to the total returns of the securities as represented by the NIFTY Next 50 Index and NIFTY 100 Index, subject to tracking errors, respectively. Both the funds will be managed passively, with investments in securities covered by the underlying index.  

“HDFC AMC has been one of the oldest players in index solutions with proven capability, giving us a definite edge. Historically, we have always maintained an investor-first approach offering investors the most effective solutions while launching products. The launch of these two funds is part of our endeavour to expand our offerings under ‘HDFC MF Index Solutions’, and provide exposure to customers to India’s large cap companies that have the ability of delivering competitive risk-adjusted returns,” said Navneet Munot, Managing Director and Chief Executive Officer, HDFC Asset Management Co. Ltd.  

What is an ETF? 

ETFs (Exchange-Traded Funds) are the funds that are traded on exchanges, generally tracking a specific index. ETFs are less volatile than individual stocks. It comprises a basket of stocks, which ensures less volatility. Generally, the best ETFs have low expense ratios, the fund's cost as a percentage of your investment. ETFs are similar to index mutual funds, however, they trade just like stocks 

Earlier, shares of HDFC AMC dropped over two per cent to close at Rs 1859.55 per share on the BSE on Monday.