Publish Date:
Edelweiss Mutual Fund has launched the Edelweiss Nifty Alpha Low Volatility 30 Index Fund, an open-ended equity scheme replicating the Nifty Alpha Low Volatility 30 Index Fund.
The Nifty Alpha Low-Volatility 30 Index is a multi-factor index based on 2 factors - Alpha and Low Volatility. Alpha adds to the performance, while low volatility means controlled risk.
The investment objective of the scheme is to provide returns before expenses that closely correspond to the total returns of the Nifty Alpha Low Volatility 30 Index, subject to tracking errors. However, there is no assurance that the investment objective of the Scheme will be realized, and the Scheme does not assure or guarantee any returns.
Being an index fund, it follows a passive style of investing. The net assets of the scheme will be invested in the same weightage as the stocks constituting the Nifty Alpha Low Volatility 30 Index. The investment strategy would revolve around reducing the tracking error to the least possible through rebalancing the portfolio, considering the change in weights of stocks in the index as well as the incremental collections/redemptions from the Scheme.
Note, tracking errors are inherent in any index fund and such errors may cause the schemes to generate returns which are not in line with the performance. Tracking error is a measure of the difference in returns from the Scheme and the returns from the underlying Index. It is computed as the standard deviation of the difference between the daily returns of the underlying benchmark Index and the NAV of the Scheme. The Scheme will endeavour to keep the tracking error as low as possible. Under normal circumstances, such tracking error is not expected to exceed 2% per annum, according to the Scheme Information Document (SID).
A small portion, i.e. up to 5% of its net assets may be allocated in debt and money market instruments. Money Market instruments include commercial papers, commercial bills, treasury bills, Tri-party repo, Government securities having an unexpired maturity of up to one year, call or notice money, certificate of deposit, usance bills, and any other like instruments as specified by the Reserve Bank of India (RBI) from time to time.
The Scheme will benchmark its performance against the Nifty Alpha Low Volatility 30 Index (TRI). This index is designed to reflect the performance of a portfolio of stocks selected based on the top combination of Alpha and Low Volatility. It intends to counter the cyclicality of a single-factor index strategy and provides investors with a choice to take exposure to multiple factors through a single index product. The Index consists of 30 stocks selected from Nifty 100 and Nifty Midcap 50. The weights of the stocks are derived from Alpha and Low Volatility factor scores with individual stock weight capped at 5%.
Table: Top constituents of the Nifty Alpha Low Volatility 30 Index
(Source: NSE Indexogram Factsheet as of April 2024)
The Nifty Alpha Low Volatility 30 Index has exposure to sectors such as FMCG, auto & auto components, healthcare, oil & gas, financials, construction, capital goods, etc.
The Edelweiss Nifty Alpha Low Volatility 30 Index Fund will be managed by Mr. Bhavesh Jain who holds an MMS (Finance degree) and has a total work experience of over 14 years in the equity market segment. He has been associated with Edelweiss Mutual Fund for over 11 years. Currently, he is co-head for hybrid and solution funds -- a key person -- and manages various schemes at the fund house.
Radhika Gupta, MD & CEO of Edelweiss Mutual Fund, in a press release said:
"This fund is an ideal solution for investors seeking to invest in large-cap oriented strategy which can outperform the broader market. This multi-factor approach, blending alpha and low-volatility factors, aims to deliver performance while mitigating volatility, thereby enhancing risk-adjusted returns for investors."
The scheme is available for subscription during the New Fund Offer period from April 26, 2024, to May 10, 2024, and has both Regular Plan and Direct Plan options for investment. The minimum investment amount is Rs 100/- and in multiples of Re 1 thereafter.
Note if you are considering investing in this scheme, make sure your risk appetite is very high and an investment horizon of around 5 to 7 years.
To know more about Edelweiss Nifty Alpha Low Volatility 30 Index Fund download and read the Scheme Information Document and Key Information Memorandum.
Happy Investing!