HDFC Mutual Fund launched a passively managed index fund - the HDFC NIFTY100 Low Volatility 30 Index Fund, that invests in large-cap stocks based on volatility parameters. Like every index fund, the fund only tracks the benchmark index with no active fund manager participation, which makes it cheaper in terms of management charges.
NFO Details
The new fund offering (NFO) runs from June 21, 2024 to July 5, 2024. The minimum investment amount is Rs. 100 and any amount thereafter. Allotment of units will be done after the deduction of applicable stamp duty and transaction charges.
There is no exit load involved in the scheme.
Investment Considerations
The NIFTY 100 Low Volatility 30 TRI selects 30 stocks with the lowest volatility in the last year from the large-cap parent index- NIFTY 100 universe. It will track the benchmark NIFTY100 Low Volatility 30 Total Returns Index. Historically, the NIFTY100 Low Volatility 30 TRI Index provided higher average rolling returns over one, three, five and 10-year horizons compared to the NIFTY 100 Index, the fund house said citing NSE data.
Moreover, the large-cap index has historically demonstrated resilience during periods of market stress. NIFTY100 Low Volatility 30 Total Returns Index's fall was of lower magnitude in those financial years when the NIFTY 100 TRI showed negative returns.
While falling less on the downside, the NIFTY100 Low Volatility 30 TRI has performed in line with the NIFTY 100 TRI on average on the upside, the fund house said. Such performance in both rising and falling markets makes it worth conservative investors' consideration, it added.
The index is reviewed and rebalanced quarterly in March, June, September and December. As of May 31, 2024, NIFTY100 Low Volatility 30 is overweight in FMCG, Healthcare and Consumer Durables, and underweight in Financial Services and Oil & Gas relative to the NIFTY 100.
