The Zerodha Fund House announced on Friday that it has reached its one-year milestone since the launch of its inaugural fund, the Zerodha Nifty LargeMidcap 250 Index Fund. This fund, which mirrors the performance of the Nifty LargeMidcap 250 Index, delivered impressive returns of 35.13%. For investors who put in Rs 1 lakh at the fund’s inception, their investment would have grown to Rs 1.35 lakh within this timeframe. 

Offering diversified exposure across 100 large-cap companies and 150 mid-cap companies, the fund currently boasts an asset under management (AUM) of Rs 677.23 crore as of November 2024. Some of the key holdings within the fund include prominent companies such as HDFC Bank, ICICI Bank, Reliance Industries, Infosys, and ITC.

The fund’s strategy aims to achieve a balance between risk and return over the long term by evenly distributing funds between large-cap and mid-cap companies. While mid-caps present higher growth potential, they also come with increased volatility. Investors should exercise caution despite the favorable performance.

The Zerodha Nifty LargeMidcap 250 Index Fund is categorised as high-risk, making it most suitable for investors with a long-term perspective and a higher tolerance for risk.

Market fluctuations, particularly in mid-cap stocks, can lead to significant volatility in the fund’s performance.

Despite its cost-effective attributes such as a low expense ratio of 0.26% and no exit load fees, it is important to note that past performance does not guarantee future returns and the risk of loss remains.

With a tracking error of 0.04%, the fund closely mirrors its benchmark index.

Investors can start with a minimum investment of Rs 100, making it accessible for small investors. 

The fund house explains that if an investor invests Rs 1,000 in this index fund, Rs 500 will mostly be allocated towards the top 100 largecap companies and the remaining Rs 500 will mostly be allocated towards the next 150 midcap companies. Investing in this fund offers a simple & optimised way to invest passively in the Indian equity market while diversifying across various companies, sectors and market capitalizations.

“Midcap companies may offer better return potential compared to largecap companies, but may also be more volatile compared to the large-cap companies. Therefore, by equally allocating your money between midcap and largecap companies, the fund aims to offer a good balance between risk & return for long term wealth creations. The fund might be suitable for someone who is looking for investing with a long term horizon in mind. You can choose to start investing with an investment amount as low as Rs 100,” the fund house said.