DSP BSE Sensex Next 30 Index Fund NFO review: A smart opportunity

DSP Mutual Fund has launched an index fund and an ETF (exchange-traded fund) , both designed to track the BSE Sensex Next 30 index. Investors with a demat account can choose the ETF route, while those without one can opt for the index fund. As the name suggests, this passive fund will invest in the 31st to 60th largest companies by free-float market value on the Bombay Stock Exchange. The new fund has been open for subscription since January 10, 2025, and will remain open to the public until January 24, 2025. DSP BSE Sensex Next 30 Index Fund NFO snapshot NFO period January 10 to January 24, 2025 Benchmark BSE Sensex Next 30 Index Fund manager(s) Anil Ghelani and Diipesh Shah Expense ratio Up to 0.5 per cent and 1 per cent for direct and regular plans, respectively. 0.20 per cent for ETF. Tax treatment If units are sold within a year, capital gains will be taxed at 20 per cent. If units are sold after a year, capital gains will be taxed at 12.5 per cent. However, gains of up to Rs 1.25 lakh are tax-exempt. About DSP BSE Sensex Next 30 Index Since DSP's new fund will passively copy what the BSE Sensex Next 30 index is doing, let's get to know the latter better. The BSE Sensex Next 30 index was introduced just last year. The Sensex showcases the top 30 giants of the stock market, ranked by their free-float market capitalisation. The BSE Sensex Next 30, as the name suggests, is the league of the next 30 companies. The index is reconfigured twice a year, once in June and then in December. Top five companies in the index Trent (6.2 per cent weight) Oil and Natural Gas Corporation (4.4 per cent) Bharat Electronics (4.2 per cent) Bajaj Auto (4.2 per cent) Jio Financial Services (3.9 per cent). The top five companies in the index collectively hold around 23 per cent of the total weight, while the top 10 contribute close to 42 per cent. Compared to other large-cap indices like the BSE Sensex, BSE 100 and Nifty 50, this indicates a relatively lower concentration in a few stocks, which, on paper, is a good thing. BSE Sensex Next 30 is less reliant on its top 10 stocks Index Weightage of the top five companies Weightage of the top 10 companies BSE Sensex Next 30 23.50% 42.10% BSE Sensex  45.90% 66.40% BSE 100 31.50% 45.50% Nifty 50 39.60% 57.30% Source: BSE Indices Factsheets Weightage as of December 31, 2024 Under-representation of Sensex Next 30 companies The Sensex Next 30 index and the Nifty 50 have 21 stocks in common, but these company stocks make up only