HDFC Mutual Fund launches three smart beta ETFs

HDFC Asset Management Company Ltd has announced the launch of Nifty100 Quality 30 ETF, Nifty50 Value 20 ETF and Nifty Growth Sectors 15 ETF, in order to expand its suite of HDFC MF Index Solutions.

Smart beta investing involves stock selection and weighing that is done based on pre-defined factors, as defined in the underlying index methodology by NSE Indices Ltd.

These investment strategies look to provide better risk-adjusted returns than broad market-cap weighted indices.

As per the fund house, the indices underlying the smart beta exchange-traded funds (ETFs) – the Nifty100 Quality 30 Total return Index (TRI), Nifty50 Value 20 TRI and Nifty Growth Sectors 15 TRI – generated higher average rolling returns over one, three, five and 10-year horizons compared to the Nifty 100 and Nifty 50 TRI.

Navneet Munot, managing director and chief executive officer, HDFC Asset Management Co. Ltd, said, “Smart beta investing is popular globally with assets under management (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.“

The Nifty100 Quality 30 index includes top 30 companies from its parent Nifty 100 index, selected based on their ‘quality’ scores. The quality score for each company is determined based on return on equity (ROE), financial leverage (Debt/Equity Ratio) and earning (EPS) growth variability analysed during the previous 5 years.

The Nifty50 Value 20 Index is designed to reflect the behaviour and performance of a diversified portfolio of value companies forming a part of Nifty 50 Index. It consists of the 20 most liquid value blue chip companies listed on NSE.

Nifty Growth Sectors 15 Index comprises of 15 companies listed on National Stock Exchange of India & on which, stock derivatives are available. The constituent weights are capped at 15%.

As per the fund house, investors can consider diversifying their investments across factors based on individual preferences, since performance of various factors changes across different market environments. With a minimum investment of 500 per ETF, this is an opportunity for investors to diversify across all three smart beta ETFs.

The new fund offer (NFO) for the three ETFs would remain open from 9-20 September and the fund manager to the schemes would be Krishan Kumar Daga.

The minimum investment in the schemes during the NFO period would be 500 and there would be no exit load in the schemes.

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