IDFC Mutual Fund (MF) on Tuesday announced the launch of IDFC Nifty100 Low Volatility 30 Index Fund, an open-ended index scheme comprising 30 least-volatile large-cap stocks aimed at long-term growth.
The new fund offer (NFO) opens on September 15, 2022, and closes on September 23, 2022. Investors can purchase the scheme through licensed MF distributors and online platforms, including the IDFC website.
Vishal Kapoor, CEO of IDFC Asset Management Company (AMC), commented on the scheme, saying, “The low-volatility strategy provides investors an opportunity to benefit from the high return potential of the equities while aiming to reduce volatility.”
He added that the index “provided a compelling risk-reward opportunity over the years, yielding relatively higher returns with relatively lower risk as against major stock indices.” In a press release, Kapoor emphasised the fund could help investors deal with volatility that often led to “unjustified investment decisions.”
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Fund’s Key Highlights
The fund house said the Nifty100 Low Volatility 30 Index would assign a higher weightage to less volatile stocks and lower weightage to higher volatile stocks.
It observed that over the past 10 years, the Nifty100 Low Volatility 30 Index returned 15.4 per cent gains annually versus 14.6 per cent for the Nifty 100 Index and 14.0 per cent for the Nifty 50 Index, as on August 30, 2022.
It argued that the index demonstrated a strong ability to endure volatility, with “return per unit of risk is 1.05” for the Nifty100 Low Volatility 30 Index against 0.85 for the Nifty 100 Index and 0.83 for the Nifty 50 Index.
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The fund’s strategy would involve a “well-diversified basket of less volatile large-cap stocks,” with a long-term potential to deliver higher returns while providing a cushion for market downturns.
The fund stressed it could be “an effective investment opportunity” for long-term investors.
Markets On A Recovery Path
India’s stock market has been on an upward trend post the second wave of Covid-19-induced slowdown last year. As a result, many fund houses like Mirae Asset Mutual Fund, ICICI Prudential Mutual Fund, etc., have launched NFOs recently, hoping to capitalise on this growth trend.m
