HDFC Mutual Fund introduces HDFC NIFTY100 Low Volatility 30 Index Fund: An option for factor-based investing

HDFC Mutual Fund launched a new index fund called HDFC NIFTY100 Low Volatility 30 Index Fund. This fund aims to track the NIFTY 100 Low Volatility 30 Index, which means it will invest in the same 30 large-cap stocks that make up that index. The goal is for the fund's performance to mirror the index's (minus some fees), so it targets investors looking for a way to get exposure to those specific low-volatility stocks.

There's no minimum investment required beyond a basic ₹100, and the offer is open until July 5th, 2024. Just keep in mind that there's no guarantee the fund will achieve its objective.

Factor-based index funds are a relatively new type of investment. Many of these funds have been around for less than three years, and some for less than a year. Despite their newness, there are good reasons to consider including them in your portfolio of passive investments.

These funds have the potential to outperform broader market indices like the Nifty 50 or Nifty 500. Over the past year, for example, factor-based index funds (Above category average) returned an average of 53.86%, compared to the 24.94% return from the Nifty 50 as of June 21, 2024.

The returns from these funds ranged from 30% to over 92%, with even the lowest-performing fund outpacing the Nifty 50, which is the most widely used index in equity passive funds.

Factor indices can cater to various investment goals, styles, and risk levels. By understanding the different factors that these indices are based on, you can make more informed investment choices.

HDFC NIFTY100 Low Volatility 30 Index Fund

The investment objective of the HDFC NIFTY100 Low Volatility 30 Index Fund is to generate commensurate returns (before fees and expenses) with the performance of the NIFTY100 Low Volatility 30 Index (TRI), subject to tracking error. There is no assurance that the investment objective of the Scheme will be achieved.

Benchmark

The performance of the HDFC NIFTY100 Low Volatility 30 Index Fund will be benchmarked to the performance of the NIFTY100 Low Volatility 30 Index (TRI).

Risk-o-meter:

Funds Allocation

Who Should Invest?

This offering memorandum of HDFC NIFTY100 Low Volatility 30 Index Scheme is intended for those investors who wish to invest in equity securities that are part of the NIFTY100 Low Volatility 30 Index.

Peer Mutual Fund Schemes

Who Manages the Scheme?

Nirman Morakhia, 39, holds an MBA in Financial Markets BMS degree. With over 16 years of experience in equity dealing, Nirman has established himself as a seasoned professional in the financial industry. Since March 15, 2018, Nirman has been contributing his expertise to HDFC Asset Management Company Limited.

Arun Agarwal, 51, is a Chartered Accountant and holds a B.Com degree. With over 25 years of extensive experience in equity, debt, and derivative dealing, fund management, internal audit, and treasury operations. He has been a part of HDFC Asset Management Company Limited since September 16, 2010.

The HDFC NIFTY100 Low Volatility 30 Index Fund presents a compelling option for investors interested in low-volatility, large-cap equity exposure. This fund aims to deliver returns mirroring its NIFTY100 Low Volatility 30 Index (TRI), although achieving its objectives is not guaranteed. Factor-based investing offers the potential for higher returns, enhancing diversified investment portfolios.