Smart Beta investing involves stock selection and weighting based on factors, rather than size, as defined in the underlying index methodology by NSE Indices Limited (NIFTY 50). Here are key things to know about the NFOs
HDFC Asset Management Company Ltd has announced the launch of two Smart Beta ETFs- HDFC NIFTY200 Momentum 30 ETF and HDFC NIFTY100 Low Volatility 30 ETF. These new fund offers (NFOs) will end for subscription on October 6.
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The minimum investment required for these is Rs 500 per application and in multiples of Rs 1 thereafter.
Investors can consider diversifying their investments across factors based on individual preferences, since performance of various factors changes across different market environments, HDFC AMC said.
What is smart beta investing?
Smart Beta investing involves stock selection and weighting based on factors, rather than size, as defined in the underlying index methodology by NSE Indices Limited (NIFTY 50). These investment strategies endeavour to provide better risk-adjusted returns than broad market cap weighted indices.
The indices underlying the additional Smart Beta ETFs - HDFC NIFTY200 Momentum 30 ETF & HDFC NIFTY100 Low Volatility 30 ETF – have generated higher long-term returns than the NIFTY 200 TRI and the NIFTY 100 TRI, respectively. Both have generated higher average rolling returns over 1, 3, 5 and 10 year horizons compared to the NIFTY 200, 100 and 50 TRI, according to HDFC AMC.
Commenting on this, Navneet Munot, Managing Director and Chief Executive Officer, HDFC Asset Management Co. Ltd. said, “Smart Beta investing is popular globally with AUM rising steadily. Smart Beta ETFs offer one-shot diversification of portfolio at a low cost, and is proven tool for investors who seek returns over the long-term."
About the funds
HDFC NIFTY200 Momentum 30 ETF
This is an open ended scheme replicating /tracking NIFTY200 Momentum 30
Index (TRI). Returns that are commensurate (before fees and expenses) with the performance of the Underlying Index NIFTY200 Momentum 30 Index (TRI) over long term, subject to tracking error.
HDFC NIFTY100 Low Volatility 30 ETF
This is an open ended scheme replicating/ tracking NIFTY100 Low Volatility 30 Index (TRI). Investment in securities is covered by NIFTY100 Low Volatility 30 Index.
(Edited by : Anshul)