All You Need To Know About NIFTY Midcap 150 Quality 50 Index3 min read
Would you consider investing in midcap stocks or midcap funds?
Is it a good idea to invest in midcap stocks?
Despite your desire to invest in midcap stocks, you believe there is a lot of junk in these stocks and want to avoid them.
The Nifty Midcap 150 Quality 50 index is a strategy index in the midcap space that aims to do precisely that. Investing in this index fund gives investors access to a diversified portfolio of mid-cap stocks.
How does the Nifty Midcap 150 Quality 50 index select stocks & are there any factors to keep in mind before exploring the Nifty Midcap 150 Quality 50 Index.
Let’s find out.
How does the Nifty Midcap 150 Quality 50 index select stocks?
Nifty Midcap 150 is the parent index. From the universe of midcap stocks in the Nifty Midcap 150 index, 50 quality stocks are selected.
How would you define “Quality?”?
A quality stock cannot be defined objectively. Definitions can vary widely. Let’s examine how Nifty Indices defines “Quality” for this index.
In selecting the Quality index stocks, the companies in the Nifty Midcap 150 index are ranked based on the following criteria, and the top 50 stocks are selected.
- Return on equity (Higher the better)
- Debt-to-equity (except for financial services companies) (Lower the better)
- Variability in EPF growth (Lower the better. Stable earnings are better)
Data from the previous five years is considered. Equal weight is given to all the parameters. The index is rebalanced semi-annually.
You can read the detailed methodology here. You can also look at the current constituents here (you will not get the weight of each stock). You can check the sectoral breakup and top constituents as at the end of last month in the factsheet.
5 key factors to keep in mind before exploring the Nifty Midcap 150 Quality 50 index
- The Nifty Midcap 150 Quality 50 index was launched only in October 2019. Any prior data is back-fitted. Hence, you would expect past returns to be good.
- Interestingly, the Nifty Midcap 150 Quality 50 index has underperformed Nifty Midcap 150 since its launch in October 2019.
- Past performance does not guarantee future performance.
- While the performance of the midcap quality index is impressive, it does not mean this is the best way to invest in midcap stocks. We have not tested any other strategy.
6 reasons why should you consider exploring this fund?
1. Potential to ‘earn big’
This simple way to own the potential leaders of tomorrow which offers you a chance to ‘earn big’ returns by utilizing this high-risk, high-return strategy.
2. Convenient Access
Invest in ‘quality’ 50 mid-cap companies with higher profitability, lower leverage & more stable earnings.
3. A ‘zero-bias’ strategy
Invests in each stock similarly to the Nifty Midcap 150 Quality 50 Index, without any bias, no fund manager ‘thinking’ or emotions involved.
4. Low-cost strategy
Comparatively lower expense ratio than actively managed mid-cap funds.
5. Affordable
To buy just 1 share of each stock in Nifty Midcap 150 Quality 50 Index (as of Oct 29, 2021), you will need to pay over ₹2.2 Lakh + brokerage. But this ETF allows you to buy the same 50 stocks starting as low as ₹5,000 (during the NFO period).
6. Past history
There have been good returns of Nifty Midcap 150 Quality 50 Index in the past.
How can you explore the NIFTY Midcap 150 Quality 50 Index?
If you’re interested in exploring the NIFTY Midcap 150 Quality 50 Index then you can do so with India’s first passive fund the DSP Nifty Midcap 150 Quality 50 ETF-NFO through the Paytm Money app.
The DSP Nifty Midcap 150 Quality 50 ETF-NFO helps you explore in 50 ‘quality’ mid cap stocks via a rule-based, low cost passive strategy, replicating the Nifty Midcap 150 Quality 50 Index.
Explore Nifty Midcap 150 Quality 50 Index
Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Paytm Money Ltd SEBI Reg No. INA100009859 Regd Office: 136, 1st Floor, Devika Tower, Nehru Place, Delhi – 110019. The NFO offering is non Exchange traded products and Paytm Money Ltd (PML) is acting as an agent for distributing the same. Please note all disputes with respect to the distribution activity, would not have access to the Exchange investor redressal forum or Arbitration mechanism. This is in no way to be considered as an advice or recommendation (Data as on 29 Oct 2021; Source: invest.dspim.com).
