Nifty Midcap 150 Quality 50 Index Fund vs Nifty Midcap 150 Index Fund

[RadioactiveTabela]

I want to increase exposure to Midcap stocks. Please help me pick between Nifty Midcap 150 Quality 50 Index Fund vs Nifty Midcap 150 Index Fund?

See: https://www.indmoney.com/mutual-fun...wal-nifty-midcap-150-index-fund-direct-growth

 

[j_s]

Nifty midcap 150 index fund

 

[sxchzy]

dont go for mutual funds
i would say
either make baskets of those mid caps stocks which you find lucrative and invest in them in the form of sip
you will save a lot in expense ratio

 

[RadioactiveTabela]

dont go for mutual funds
i would say
either make baskets of those mid caps stocks which you find lucrative and invest in them in the form of sip
you will save a lot in expense ratio

That's not an option for me due to insider trading regulations. Investing in individual stocks is too cumbersome due to disclosure and reporting requirements.

 

[RadioactiveTabela]

Nifty midcap 150 index fund

Why but?

 

[sxchzy]

I want to increase exposure to Midcap stocks. Please help me pick between Nifty Midcap 150 Quality 50 Index Fund vs Nifty Midcap 150 Index Fund?

See: https://www.indmoney.com/mutual-fun...wal-nifty-midcap-150-index-fund-direct-growth

choose lesser aum fund
lesser expense ratio fund
higher alpha fund
thats it
that should make your decision much more easier

 

[navam]

choose lesser aum fund
lesser expense ratio fund
higher alpha fund
thats it
that should make your decision much more easier

Wait why lesser AUM fund?

 

[gurubhai]

Watch this if it helps:

 

[j_s]

Why but?

Because that is what the AMCs are pushing. Higher inflow of cash - more buying in that basket - higher prices in turn.

Once all this settles move to whatever is being pushed at that time.

Nothing matters in the markets more than actual cash.

 

[sxchzy]

Wait why lesser AUM fund?

higher aum funds have underperformed compared to lower aum funds due to higher capital base risk

 

[sxchzy]

That's not an option for me due to insider trading regulations. Investing in individual stocks is too cumbersome due to disclosure and reporting requirements.

do you work in a mf or amc?

 

[gurubhai]

do you work in a mf or amc?

Many Companies in Finance fields put such restrictions.

higher aum funds have underperformed compared to lower aum funds due to higher capital base risk

Index funds are different from managed mutual funds so AUM doesn't matter there. This is true for Nifty 50 and I think should be true for other Index mutual funds as well.
The answer which you just gave applies to Higher AUM managed MFs.

 

[RadioactiveTabela]

do you work in a mf or amc?

No, I work with a firm that listed companies consult for things.

 

[RadioactiveTabela]

Because that is what the AMCs are pushing. Higher inflow of cash - more buying in that basket - higher prices in turn.

Once all this settles move to whatever is being pushed at that time.

Nothing matters in the markets more than actual cash.

Hmmm, interesting approach. But since M150 AUM is almost 3-5 times the AUM of M150Q50 funds, won't AMC shift focus to pushing M150Q50 soon enough?

 

[CARDBITRAGE]

dont go for mutual funds
i would say
either make baskets of those mid caps stocks which you find lucrative and invest in them in the form of sip
you will save a lot in expense ratio

Good recommendation. But this will require a lot of time and more importantly knowledge to analyse mid-cap stocks. Most people should stick to mid cap index funds IMO.

 

[j_s]

Hmmm, interesting approach. But since M150 AUM is almost 3-5 times the AUM of M150Q50 funds, won't AMC shift focus to pushing M150Q50 soon enough?

Why speculate?

 

[CARDBITRAGE]

My recommendation is to go with Midcap 150 as opposed to Quality 50. Go with a fund with the highest AUM(and lowest TER). But be wary of the markets in the short term if you are considering lumpsum investments. Markets are jittery after Fitch downgraded US credit rating. What's more worrying is the reducing gap between Nifty/Sensex and 10-year US Treasury bonds yields.

 

[BlueFlash]

Index funds are different from managed mutual funds so AUM doesn't matter there.

Dead wrong... Lower AUM in Index funds causes higher tracking error... Due to low AUM, they have to keep significantly higher cash reserve for redemption liquidity, which in turn increases the tracking error... also a lower AUM means they can't buy all the shares in the listed Index at the exact multiple everytime, so again that increase the tracking error... Not saying that you should go for the largest AUM one, but just want to emphasize that a decently low AUM is bound to have a higher tracking error (again, need not be a negative, can be positive error too !)... It's always preferable to pick an Index fund with an average plus AUM.

 

[BlueFlash]

My advice: Never go for a Quality based factor on a smart beta Index fund... It's heavily trained on historical data, to get those perfect past returns which are bound to beat the market weighted Indices... Momentum and Volatility still kind of make sense since their factor ain't based on hindsight result and so can't be tweaked... My choice is always a market weighted Index, let the market do it's job...
As the legendary John Clifton Bogle, aka Jack Bogle, used to say "Don't look for the needle in the haystack. Just buy the haystack"

 

[gurubhai]

Dead wrong... Lower AUM in Index funds causes higher tracking error... Due to low AUM, they have to keep significantly higher cash reserve for redemption liquidity, which in turn increases the tracking error... also a lower AUM means they can't buy all the shares in the listed Index at the exact multiple everytime, so again that increase the tracking error... Not saying that you should go for the largest AUM one, but just want to emphasize that a decently low AUM is bound to have a higher tracking error (again, need not be a negative, can be positive error too !)... It's always preferable to pick an Index fund with an average plus AUM.

I never suggested to buy the lowest AUM but I pointed out the guy who suggest so.
The cash component a fund keeps with themselves is percentage based, it is only gonna matter in your so called "tracking error" if they change this "percentage" based on AUM .
Atleast give some reasonable explanation why lower AUM funds have to keep higher cash component? and higher AUM funds don't Mr. Dead Wrong.
.
The Way you said it, Navi Nifty 50 Index(which is relatively very new) wont be having lowest tracking error given the AUM is very less compared to other Nifty 50 Index funds. Obviously there are other factors too affecting the tracking error. So why not look at the broader parameters like tracking error and expense ratio to choose the index fund instead of AUM?