DSP MF launches Nifty500 Flexicap Quality 30 Index Fund

By Vriti Gothi

DSP Mutual Fund has launched the DSP Nifty500 Flexicap Quality 30 Index Fund, which integrates high-quality stock selection with dynamic market capitalisation allocation driven by momentum signals.

This innovation represents a significant step forward in the evolution of passive equity investing in India, providing investors with a transparent, disciplined, and resilient solution to navigate shifting market conditions.

The fund replicates the Nifty500 Flexicap Quality 30 Index, the first flexicap index in the country, designed to identify 30 fundamentally strong companies across large, mid, and small-cap segments, equally weighted within each category. Stock selection is guided by stringent quality parameters, including high return on equity, low debt, and consistent earnings growth.

In a strategic advancement over traditional static allocation models, the index incorporates a momentum-based flexicap framework to optimise exposure between large, mid, and small caps. Using a rule-based signal that compares the small-and-mid-cap (SMID) to large-cap ratio against its 200-day moving average, the allocation is rebalanced quarterly to either 33% or 67% in each segment, ensuring a systematic response to evolving market dynamics.

Since its inception in October 2009, the Nifty500 Flexicap Quality 30 Index has delivered a CAGR of 18.1%, outperforming the Nifty 500 TRI’s 13.0% over the same period. The index’s resilience is further reflected in its performance during volatile phases, with median 5-year SIP returns of 20.3% versus the Nifty 500 TRI’s 15.8%.

By combining passive management with first-principles investing, the DSP Nifty500 Flexicap Quality 30 Index Fund eliminates the need for investors to make frequent allocation shifts or incur associated costs. Its tax-efficient, rules-based rebalancing also removes the behavioural pitfalls and operational frictions that often erode long-term returns in active or DIY strategies.