Mirae Asset Mutual Fund has announced the launch of the Mirae Asset Nifty 100 Low Volatility 30 ETF. This is an open-ended scheme that will replicate and/or track the Nifty 100 Low Volatility 30 Total Return Index (TRI).
The new fund offer (NFO) opened for subscription on March 13, 2023 and will close on March 21, 2023. The scheme will then re-open for continuous sale and repurchase on March 27, 2023.
During the NFO, the minimum subscription will be for Rs. 5,000 and in multiples of Re. 1. There is no exit load.
Mirae Asset Mutual Fund said in a press statement that the Nifty100 Low Volatility 30 Index is a smart beta exchange-traded fund (ETF) that aims to measure the performance of the low volatile securities in the large market capitalisation segment.
“Smart Beta ETFs are gaining popularity across the globe as they have the potential to generate alpha by using different factors. Smart Beta ETFs aim to potentially combine the benefits of both active and passive investing,” Mirae Asset said in a statement.
Mirae Asset said that the Nifty 100 Low Volatility 30 index has done well in times of market distress, and so, investors may use this as an investment during the bear phase.
“In the long-term it can be potentially used for investment, as the Nifty 100 Low Volatility 30 Index has generated higher risk-adjusted returns over a longer horizon. Also, it has relatively lower drawdown compared to a broad market as well as other factor indices. Lastly, it provides alternate sectorial exposure which is different from the Nifty 100 Index,” it added.
Mirae Asset said in a product brochure that the Nifty 100 Low Volume 30 Index is skewed towards the fast-moving consumer goods (FMCG) stocks and healthcare, compared to Nifty 100 Index. The portfolio is also well-diversified with a lower stock concentration. Also, Nifty 100 Low Vol 30 Index has done relatively better than actively managed large-cap funds especially over the longer investment horizon.
Mirae Asset said the scheme is suitable for investors who are seeking returns commensurate with the performance of Nifty 100 Low Volatility 30 TRI, and also want to invest in equity securities covered by Nifty 100 Volatility 30 TRI.
Siddharth Srivastava, head – ETF product and fund manager, Mirae Asset Investment Managers (India) Pvt. Ltd. said, “Smart beta strategies typically capture factor exposures using systematic, rules-based approaches cost-effectively. This fund may be used by investors who are cautious about portfolio volatility, and downside risk and are keen to generate long-term wealth with relatively lower risk.”
“In times of uncertainty in the markets like these, low volatility ETFs may be considered for investments. Nifty 100 Low Volatility 30 Index aims to generate better risk-adjusted return over a longer horizon and provides alternate sectorial exposure,” he added.
