Nippon India Nifty Auto vs TATA NIFTY AUTO INDEX FUND

Nippon India Nifty Auto and Tata Nifty Auto Index Fund are almost mirror images of each other, exhibiting a 99.7% overlap – ranking them within the top 23% of all fund pairs we’ve analysed (pair rank 1150 of 5000). This isn’t surprising, as both aim to replicate the Nifty Auto index. The extremely high overlap is driven by a massive concentration in the Automobiles sector, accounting for 76.5% of the shared portfolio.

The biggest contributors to this similarity are the top auto players: Mahindra & Mahindra, Maruti Suzuki, and Bajaj Auto. Weights in these key stocks are virtually identical between the two funds, explaining the near-total portfolio replication. Both funds hold the same 15 stocks, and there are no holdings unique to either scheme.

However, the difference lies in the AMC – Nippon vs Tata – and consequently, the expense ratios. While both track the same index, slightly different management can lead to minor tracking error over time. But realistically, expect very similar returns from both.

This level of overlap is exceptionally high. Holding both funds offers almost no diversification benefit and essentially doubles your exposure to the auto sector. An investor considering both should understand they are making a bet specifically on the performance of the Nifty Auto index, and not diversifying their portfolio.