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Argha Pratim Chowdhury made post

How is UTI Nifty Index fund beneficial in case of long term investment?

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shrinidhi Rajan answered.
9 months ago

The UTI Index Fund is a passive fund launched by UTM AMC that tracks the Nifty 50 index. The Index fund is a passive play on the markets for investors who do not want take on the risk of stock selection or of additional beta. Index funds create a portfolio that is exactly a proxy for the index and hence these are good passive ways to play in the stock markets.

In any long term portfolio, you must have a small allocation to passive investing and that is where something like UTI Nifty Index fund will fit in perfectly. Over the last five years, the UTI Nifty Fund has given CAGR returns of 8.54% and this is above the returns that the Nifty has given which is a good signal. The UTI Index fund has a portfolio beta of 0.99, which is a good approximation of the index overall. Also the standard deviation at 12.3% is close to the index standard deviation. This ensures low tracking error. The expense ratio of the fund at 0.17% is also extremely low and can add to net returns.