Nifty 500 Multicap 50:25:25: A better way to own Nifty 500?

Two similar-looking indices. One small tweak. A decade of surprisingly different outcomes. What if someone told you that two indices with the exact same 500 stocks could look and behave very differently? That’s exactly what happens when you pit the Nifty 500 against the Nifty 500 Multicap 50:25:25. Both tap into India’s top 500 companies. But while the former is more reliant on large caps, the latter ensures mid and small-caps always have a place at the table. So, does this rule-based rebalancing make the multi-cap index a smarter choice? Let’s find out. Same stocks, different recipe Both indices draw from the same universe of India’s 500 largest listed companies, but differ sharply in how they spread the weight. With Nifty 500, there’s no rule on how many should be large, mid or small companies. So, recently, it’s been about 75 per cent large-caps, 17 per cent mid-caps and only 8 per cent small-caps. But the Nifty 500 Multicap 50:25:25 works differently. It fixes the mix: always 50 per cent large-caps, 25 per cent mid-caps, and the remaining 25 per cent small-caps. Given how both indices are broadly structured, let’s now peek into the top five sectors for both indices to see if there is any big difference there. Top 5 sector weightage (%) comparison Sector Nifty Multicap Nifty 500 Financial Services 28.38 31.25 Capital Goods 8.63 5.99 Healthcare 8.05 6.21 Information Technology 7.66 8.63 Oil, Gas & Consumable Fuels 6.24 7.84 Data as of May 31, 2025 Both indices are huge fans of financial services, loading up heavily there, but the multicap spreads the affection a little more evenly across the board. Also, the top 10 stocks are exactly the same in both indices, but how much space they take up is a different story. The Nifty 500 packs them tighter, with the top 10 making up 34 per cent of the index, while the multi-cap spreads things out more evenly, giving them a lighter 23 per cent share. Do these differences actually pay off? Time to see i

This article was originally published on July 02, 2025.