HDFC AMC announces NFOs of two new smart beta ETFs

The new fund offer (NFO) for HDFC Nifty200 Momentum 30 ETF and HDFC Nifty100 Low Volatility 30 ETF will start on September 26 and continue till October 3

September 22, 2022 / 06:22 PM IST

HDFC Asset Management Company (AMC) on September 22 said it is launching two new smart beta exchange-traded funds (ETF) which will open early next week.

The new fund offer (NFO) for HDFC Nifty200 Momentum 30 ETF and HDFC Nifty100 Low Volatility 30 ETF will start on September 26 and continue till October 3.

As the name suggests, they are based on Nifty200 Momentum 30 index and Nifty100 Low Volatility 30 index. Both have 30 stocks and are selected from Nifty 200 and Nifty 100 universe.

These are also passively managed like any other ETF. However, smart beta strategies can be relatively riskier.

In them, stock selection and weighting is based on pre-defined factors as spelled out in the underlying index methodology by index providers. Factors are characteristics of a stock like momentum and low volatility.

For momentum, stocks are selected based on 6 and 12-month price return/standard deviation. For low volatility, stocks with relatively stable price movement are chosen, which is based on standard deviation of last one year price movement.

Some of the stocks in both indices are Adani Enterprises, Titan Company, M&M, ITC, Tata Motors, Coal India, Nestle India, L&T, HUL and Bajaj Auto.

Smart beta investing is a popular investment strategy globally, with assets worth $1.3 trillion.

HDFC AMC said the Nifty200 Momentum 30 TRI and Nifty100 Low Volatility 30 TRI have generated higher average rolling returns and return-risk ratios over 1, 3, 5 and 10 year horizons compared to the Nifty 200, 100 and 50 TRI.

The Nifty 100 Low Volatility 30 TRI has lower standard deviation of rolling returns over 1, 3, 5 and 10 year horizons compared to the Nifty 200, 100 and 50 TRI, it further claimed.

“Performance of various factors changes across market environments. Investors can consider diversifying their investments across factors based on individual preferences,” HDFC AMC said.

The money manager said funds will be managed by Krishan Kumar Daga and Arun Agarwal.

During the NFO period, Investors can invest minimum Rs 500 per application and in multiples of Re 1 thereafter. Units will be allotted in whole figures and the balance refunded.
Shubham Raj is a journalist with over five years of experience covering capital markets. His last stint was with The Economic Times where he wrote on daily happenings in stock markets and led IPO reportage. He also wrote on mutual funds and cryptocurrencies.
first published: Sep 22, 2022 06:22 pm
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