News

Kotak Mahindra AMC has announced the launch of the Kotak Nifty Next 50 ETF, an open-ended exchange-traded fund that will track the Nifty Next 50 Index. The New Fund Offer (NFO) for the ETF will open on December 18, 2025, and close on January 1, 2026.

The Nifty Next 50 Index comprises 50 companies selected from the Nifty 100 universe, excluding those that are part of the Nifty 50.

These companies are ranked immediately below the top 50 by market capitalisation and are often viewed as potential candidates to enter the Nifty 50 over time.

As a result, the index offers exposure to relatively large and established businesses that are still in a phase of expansion compared with the Nifty 50 constituents.

The Kotak Nifty Next 50 ETF is structured as a passively managed fund to replicate the performance of the underlying index, subject to tracking error.

As with other passive products, the portfolio composition is aligned with the index methodology, providing investors with transparency and rule-based exposure rather than discretionary stock selection by the fund manager.

A notable characteristic of the Nifty Next 50 Index is its sectoral diversification. The index includes companies from a wide range of sectors, which helps limit concentration risk and reduces dependence on the performance of any single industry. This diversified structure differentiates it from narrower sectoral or thematic indices.

From a valuation standpoint, the Nifty Next 50 Index is currently trading at a price-to-earnings (PE) multiple of around 21.8, which is below its 10-year historical average of approximately 29.9.

This indicates that the index is priced lower than its longer-term average, though future returns will continue to depend on market conditions and company-level performance. The minimum investment amount during the NFO period has been set at Rs 5,000.

Nilesh Shah, Managing Director of Kotak Mahindra AMC, stated that the ETF is intended for investors looking to gain exposure to companies that may emerge as future market leaders.

He also noted that the Nifty Next 50 Index has historically delivered higher returns than the Nifty 50 TRI over multiple time periods, including 3, 5, 10, and 20 years.

Devender Singhal, Fund Manager and Executive Vice President at Kotak Mahindra AMC, said the fund will aim to closely track the index and minimise tracking error so that returns remain aligned with the benchmark.