Navi AMC launches its first index fund tracking the Nifty MidSmallcap 400; check details before NFO investment

Navi Asset Management has unveiled a new offering that aims to give investors broad and cost-efficient access to India’s high-growth mid- and small-cap universe. The company has launched the Navi Nifty MidSmallcap 400 Index Fund, which it says is the country’s first index fund built to mirror the Nifty MidSmallcap 400 Index.

The open-ended scheme’s New Fund Offer (NFO) opened on November 24 and will remain open for subscription until December 5. Retail investors can start with a minimum investment of ₹100, continuing Navi AMC’s focus on low-cost, accessible products.

The Nifty MidSmallcap 400 Index blends two established market-cap segments: the Nifty Midcap 150 and Nifty Smallcap 250. In total, it includes 400 companies drawn from the broader Nifty 500 universe, representing a wide swath of India’s growth-oriented businesses. The benchmark is a free-float market-cap-weighted index, maintained and periodically rebalanced by NSE Indices.

The scheme aims to replicate the index’s Total Return variant, capturing both price movements and dividend income. However, the fund house has clarified that while the scheme seeks to mirror the index’s performance, achieving perfect alignment is subject to tracking error.

Aditya Mulki, CEO of Navi AMC, said the new fund offers investors a simplified way to enter the mid- and small-cap segment—an area often known for volatility but also long-term wealth creation potential.

“Mid- and small-cap companies have been at the forefront of India’s growth story, yet accessing this segment in a diversified and cost-efficient manner has remained a challenge for many investors,” Mulki said. “With the Navi Nifty MidSmallcap 400 Index Fund, we are offering a simple way to participate in this opportunity through a single, broad-based index. Our focus is on creating transparent, rules-based products that help investors build long-term wealth without complexity.”

Navi AMC, investment manager to Navi Mutual Fund, continues to expand its presence in the passive investment space. The fund house operates primarily on a direct-to-customer model and offers a mix of passive, rules-based, and active mutual fund strategies.

Other funds

Both the Mirae Asset Nifty MidSmallcap 400 Momentum Quality 100 ETF and the UTI Nifty MidSmallcap 400 Momentum Quality 100 Index Fund follow the same benchmark and operate on an identical investment philosophy. Their mandate is to track a rules-based index that selects 100 mid- and small-cap companies using momentum and quality filters. Because both funds replicate the same index, their stock portfolios, sector allocations and overall risk profiles are naturally very similar. Each holds the same 100 stocks, with major exposure to sectors such as industrials, financials, technology and consumer-linked businesses.

Where the two funds differ significantly is in structure, cost and maturity. Mirae Asset’s ETF launched earlier (May 2024) and has already built a larger asset base along with a lower expense ratio of 0.05%. UTI’s fund is newer (February 2025) and carries a higher expense ratio of 0.11% with a smaller corpus. In passive funds, lower cost and bigger scale typically help reduce tracking error, giving Mirae a practical edge at this stage.

In terms of returns, both aim to mirror the same index; however, the UTI fund’s shorter track record limits available performance data. Mirae’s fact sheet includes some trailing return figures, but comprehensive 1-month, 6-month, 1-year and 3-year comparisons cannot be drawn solely from the uploaded documents because neither fund has a full multi-year performance history yet.

Feature	Mirae Asset Nifty MidSmallcap 400 Momentum Quality 100 ETF	UTI Nifty MidSmallcap 400 Momentum Quality 100 Index Fund (Direct)
Fund Structure	Exchange Traded Fund (ETF)	Index Fund (Direct Plan)
Launch Date	May 2024	February 2025
Investment Strategy	Replicates Nifty MidSmallcap 400 Momentum Quality 100 Index	Replicates Nifty MidSmallcap 400 Momentum Quality 100 Index
Number of Stocks	100	100
Portfolio Style	Factor-based: Momentum + Quality	Factor-based: Momentum + Quality
Top Sectors	Industrials, Financials, Technology, Consumer	Industrials, Financials, Technology, Consumer
Expense Ratio	0.05%	0.11%
AUM (Approx.)	Larger (Rs 300–380+ crore range)	Smaller (Rs 90 crore range)
NAV (Latest Factsheet)	~Rs 48.92	~Rs 11.16
Liquidity	High (ETF trades on exchange)	Moderate (regular index fund; no exchange liquidity)
Ideal For	Investors comfortable with ETFs; lower cost seekers	Investors preferring simple SIP/lump-sum flows without ETF trading
1 Day	-0.62	-0.62
1 Month	0.56	0.57
3 Months	0.87	0.87

Overall, for investors seeking this factor-based mid-small-cap exposure, the choice largely boils down to cost, liquidity and comfort with an ETF versus an index fund structure.