Investing in India's inaugural passive flexicap fund, DSP Nifty500 Flexicap Quality 30 NFO - a viable option for your investment portfolio?
The DSP Nifty500 Flexicap Quality 30 Index Fund, a unique passive index fund, has demonstrated impressive performance since its inception, outperforming the Nifty 500 TRI significantly over the past decade[1][2][4].
The fund, which tracks 30 high-quality stocks evenly distributed across large-cap, mid-cap, and small-cap segments, has delivered a CAGR of 18.1% from October 2009 to June 2025, compared to the Nifty 500 TRI's CAGR of 13.0% over the same period[1][2][4]. Regarding SIP returns, the fund's benchmark index showed a median rolling 5-year SIP return of 20.3%, compared to 15.8% for the Nifty 500 TRI, indicating superior consistency and compounding potential through systematic investing[1][2].
The fund's stock universe comes from the top 10 quality names in Nifty100 Quality 30, Nifty Midcap150 Quality 50, and Nifty Smallcap250 Quality 50. The quality criteria include high return on equity (ROE), low debt, and consistent earnings growth[2][3][4].
The fund's structure has two layers: a quality filter for stock selection and a momentum trigger for shifting market cap allocation. The momentum trigger uses the SMID-to-large cap ratio to decide allocation shifts. When small and mid-cap stocks are rising faster than large caps, they receive 67% weight. When not, they drop to 33%[1][2][4].
While the DSP Nifty500 Flexicap Quality 30 Index Fund represents a low-cost, tax-efficient, and rules-based alternative to active flexicap funds, there is no direct, detailed data yet from these sources to compare its performance or consistency explicitly against other actively managed flexicap funds. However, given the fund’s strategic focus on quality, dynamic market cap allocation, and passive management, it aims to deliver more consistent risk-adjusted returns without the typical drawbacks of active timing and stock-picking[2][4][5].
Investors willing to stay invested through market phases may consider the DSP fund for core equity exposure. SIPs may work better than lump sums for this fund. The index had roughly equal weights in large, mid, and small caps as of June 2025[1][2].
As of June 2025, IT had the largest sector weight at 30% in the index, followed by Financials at 24% and FMCG at 17%. The fund's passive nature and focus on quality stocks may provide a buffer during market corrections, as observed in the recent weakness[1][2][3].
In summary, the DSP fund offers a unique blend of quality stock selection and dynamic flexicap adjustment, aiming to provide a more consistent and cost-effective alternative to active flexicap funds, though direct comparison data with active funds is limited in these sources[1][2][4][5].
| Metric | DSP Nifty500 Flexicap Quality 30 Index Fund | Nifty 500 TRI | Other Actively Managed Flexicap Funds | |-------------------------------|---------------------------------------------|--------------------------|---------------------------------------------| | CAGR (Oct 2009 - Jun 2025) | 18.1% | 13.0% | Not explicitly reported in sources | | Rolling 5-Year SIP Returns | Median 20.3% | Median 15.8% | No direct data, but typically more volatile | | Consistency | Focus on quality + momentum-based rules | N/A | Active funds vary; usually less consistent | | Cost and tax efficiency | Low-cost, tax-efficient index approach | N/A | Usually higher costs and tax implications |
[1] Moneycontrol.com [2] Business Standard [3] Economic Times [4] DSP Investment Managers [5] Value Research Online
- The DSP Nifty500 Flexicap Quality 30 Index Fund, a unique passive index fund, has demonstrated superior performance over the past decade, with a CAGR of 18.1% from October 2009 to June 2025, showing potential for investors in business sectors.
- Regarding SIP returns, the fund's benchmark index showed a median rolling 5-year SIP return of 20.3%, indicating the benefit of a subscription-based investing strategy in the fund's stocks, which cover a variety of sectors such as IT, Financials, and FMCG.
- The fund's stock universe comes from the top quality names in various segments, with technology and finance sectors representing significant weightage, demonstrating the fund's ability to provide consistent returns through investing in high-quality stocks.
- The DSP Nifty500 Flexicap Quality 30 Index Fund's unique structure combines a quality filter for stock selection and a momentum trigger for shifting market cap allocation, endeavoring to deliver more consistent risk-adjusted returns while trade is ongoing in the economy.
- The passive nature and focus on quality stocks in the DSP fund may provide a buffer during market corrections, making it a potential choice for investors seeking core equity exposure, particularly in the technology and finance sectors.
