Bandhan’s new passive fund – Bandhan BSE India Sector Leaders Index Fund offers investors a solution that they have been long looking for.
The quest for the best in class businesses has led us towards large caps – because biggest has been loosely equated with best in class.
This new index cuts across cap sizes, looks at all 21 sectors in the market, and picks the top 3 in each sector to create a unique market cap agnostic sector leaders index.
Some sectors have numerous heavyweights (like financials) while other sectors may be tiny in comparison, but can deliver excellent wealth creation nevertheless (like media, textiles etc). By picking the top 3 of each sector, this index prevents any one or two sectors from crowding out others.
Stock weights are linked to market cap, but with a minimum of 1% and a maximum of 5% for any stock – thus ensuring that all sectors get decent representation.
This index has about 80% allocation to large caps and the balance divided between mid and small caps.
This new index has outperformed the large cap index as well as the broad market BSE500 and has delivered superior risk adjusted returns compared to them.
Sirshendu says this new fund deserves to be positioned in the core portfolio of every investor due to its approach of choosing best in class from across the entire market.
It can also serve as a superior alternative for new investors’ 1st equity fund investment compared to a large cap or large&midcap or BSE500 index fund as it actually cherry picks the best of BSE500 into a single index offering.