DSP Nifty Smallcap250 Quality 50 Index Fund: Should you invest in it?

About the fund

Launched by DSP Mutual Fund, the DSP Nifty Smallcap250 Quality 50 Index Fund went public on December 5, 2023, and will conclude on December 19, 2023.

Fund’s objective

To generate returns in line with the Nifty Smallcap250 Quality 50 index

What is the Nifty SmallCap250 Quality 50 index?

It selects 50 from a pool of 250 stocks that are part of the Nifty SmallCap 250.

How are the 50 stocks picked?

They are picked based on three key parameters: - Return on equity (ROE) - Debt-to-equity ratio - Earnings growth variability

The index’s top three holdings

The index’s top sector allocations

How has the index performed?

This index has slightly outperformed an ‘average’ actively managed small-cap scheme*. *Back tested data on NSE website

Looking beyond an average fund

As many as 16 small-cap funds with a five-year history have outperformed the Quality 50 index as of November 30, 2023.

Our view

Since this is a newly-launched index, we will need to wait and see how it performs in the long run. Also, remember that small caps are subject to high market volatility.