Bandhan MF NFOs bet on high-risk undervalued stocks, top performers

Bandhan Mutual Fund on Monday launched two new index funds, the Bandhan Nifty 500 Value 50 Index Fund and the Bandhan Nifty 500 Momentum 50 Index Fund. These open-ended schemes will track the Nifty 500 Value 50 Index and Nifty 500 Momentum 50 Index, respectively. The new fund offer (NFO) for both funds will be open till October 24.

What do the funds offer?

The Bandhan Nifty 500 Value 50 Index Fund focuses on 50 undervalued companies within the Nifty 500 universe, to capitalise on stocks that may recover in value over time. Meanwhile, the Bandhan Nifty 500 Momentum 50 Index Fund focuses on 50 stocks that have shown strong recent performance, banking on the expectation that these stocks will continue their upward trend in the near term.

“Factor Investing has gained considerable traction as it targets specific characteristics that have historically driven risk or returns. The Bandhan Nifty 500 Value 50 Index Fund offers exposure to out-of-favour stocks trading below their intrinsic value. On the other hand, the Bandhan Nifty 500 Momentum 50 Index Fund focuses on stocks with strong recent performance, expecting the trend to continue,” Vishal Kapoor, CEO of Bandhan AMC said.

Who are these funds for?

These index funds are designed for investors looking to incorporate value and momentum strategies into their portfolios. The funds cater to those seeking long-term wealth creation through equity investments in the Nifty 500 Value 50 Index and Nifty 500 Momentum 50 Index, respectively.

Investors can subscribe to these NFOs through licensed mutual fund distributors or online platforms, with a minimum investment requirement of Rs 1,000.

Risk involved

Both the Bandhan Nifty 500 Value 50 Index Fund and the Bandhan Nifty 500 Momentum 50 Index Fund are high-risk investments. The scheme’s riskometer indicates that the principal is at “very high risk,” meaning investors should be aware of the potential for volatility and loss of capital.

The Nifty 500 Value 50 TRI and Nifty 500 Momentum 50 TRI are the respective benchmarks for these funds, and both indices are also categorised as very high-risk.

Key details for investors

Bandhan Nifty 500 Value 50 Index Fund

Type: Open-ended index scheme

NFO period: October 14-24, 2024

Benchmark: Nifty 500 Value 50 Index

Fund Manager: Nemish Sheth

Exit load: 0.25% if redeemed on or before 15 days from allotment; no exit load after 15 days

Minimum investment: Rs 1,000 and in multiples of Re 1 thereafter

Bandhan Nifty 500 Momentum 50 Index Fund

Type: Open-ended index scheme

NFO period: October  14-24, 2024

Benchmark: Nifty 500 Momentum 50 TRI

Fund Manager: Nemish Sheth

Exit load: 0.25% if redeemed on or before 15 days from allotment; no exit load after 15 days

Minimum investment: Rs 1,000 and in multiples of Re 1 thereafter

What is factor investing?

Factor investing is a method that selects securities based on specific characteristics linked to higher returns. These factors are divided into two categories: macroeconomic and style factors. Macroeconomic factors include inflation rates, GDP growth, and unemployment rates, while style factors consider elements like growth vs value stocks, market capitalisation, and industry sector.

The value strategy focuses on investing in stocks that are perceived to be undervalued compared to their fundamentals. Momentum, on the other hand, aims to invest in stocks that have performed well recently, expecting the trend to continue.

Investors should also consider consulting a financial adviser if they are unsure about the suitability of these products for their portfolios.