Bandhan Nifty Alpha 50 Index Fund allows investors to invest in stocks that have generated a higher alpha than the average performance of assets in the market.
Bandhan Mutual Fund announced the launch of Bandhan Nifty Alpha 50 Index Fund, an open-ended index scheme that tracks the Nifty Alpha 50 Index. It allows investors to diversify their portfolios with stocks that have demonstrated higher returns than the market in the past year.
The New Fund Offer for this scheme will be available from October 25 to November 6, 2023. Investors can invest in Bandhan Nifty Alpha 50 Index Fund with a minimum investment of Rs 1,000 during the New Fund Offer period and in multiples of Rs. 1 thereafter. There is no exit load involved in the scheme.
The Nifty Alpha 50 Index follows a structured, quantitative approach that assigns weightage to securities based on their alpha values. This means that stocks with higher alpha values (higher returns than broader market indices) receive greater weight in the index. The alpha strategy adapts to changing market conditions, the release says.
The investment philosophy of this fund is based on the Nifty Alpha 50 Index methodology, which selects the top 50 companies with the highest alpha scores from a stock universe of the top 300 stocks based on market capitalisation, provided they meet the eligibility criteria of a minimum listing history of one year. The weightage of stocks is proportional to their alpha score.
Says Vishal Kapoor, CEO of Bandhan AMC, said, "Bandhan Nifty Alpha 50 Index Fund aims to generate outperformance by selecting stocks with specific factors that produce potentially higher risk-adjusted returns compared to the market. As of September 30, 2023, the Nifty Alpha 50 Index has outperformed the Nifty 50 Index and the Nifty 500 Index, with an alpha of 5 per cent, albeit with higher volatility."
While historical data indicates the potential for high returns, investors should know that past performance does not guarantee future results. It's essential to assess investment goals and risk tolerance before investing.