Mirae Asset Mutual Fund recently launched a new fund offer (NFO) of Mirae Asset Nifty 100 Low Volatility 30 ETF.
The NFO opened on March 13 and will close on March 21. The scheme will reopen for sale and repurchase on March 27. The fund will be managed by fund manager Ekta Gala of Mirae Asset Mutual Fund.
During the NFO, an investor can invest a minimum of ₹5,000.
Nifty 100 Low Volatility 30 index is a Smart Beta ETF that aims at measuring the performance of the low volatile securities in the large market capitalization segment.
What is a Smart Beta ETF?
Smart Beta ETFs use a systematic approach to select stocks from a particular index. This form of investing follows an index but also considers alternative factors in choosing the stocks from the index.
Therefore, a Smart Beta ETF tends to choose companies that only show certain characteristics. Smart Beta is a blend of active and passive investing.
Smart Beta ETFs are gaining popularity across the globe as they kind of have the potential to generate alpha by using different factors.
“Smart beta strategies typically capture factor exposures using systematic, rules-based approaches cost-effectively. Nifty 100 Low Volatility 30 Index aims to generate better risk-adjusted return over a longer horizon and provides alternate sectorial exposure. 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,” said Siddharth Srivastava, Head, ETF Product and Fund Manager, Mirae Asset Investment Managers.
|NFO opened||March 13|
|Last date||March 21|
|Benchmark||Nifty 100 Low Volatility 30 TRI|
|Investing strategy||Smart beta ETF|
(Source: Mirae Asset Mutual Fund)
The scheme promises following benefits, claims the fund house:
I. During market volatility, Nifty 100 Low Volatility 30 index seems to have done relatively well.
II. In the short term, it may be used as an investment during the time of bear market.
III. Nifty 100 Low Volatility 30 index has generated higher risk-adjusted returns over a longer horizon. Therefore, it can be potentially used for investment in the long term.
IV. It has relatively lower drawdown compared to a broad market as well as other factor indices.
It is noteworthy to mention that Smart Beta ETFs enable investors to avoid the risk of fund manager's discretion and invest in these factors. This can help improve portfolio outcomes and reduce volatility.
Investors, however, must be aware of the fact that smart beta products are relatively expensive and can lead to concentrated exposure to certain sector or segment of the market.