ICICI Prudential Mutual Fund has announced to launch ICICI Prudential Alpha Low Vol 30 ETF, an open ended index exchange traded fund tracking Nifty Alpha Low Volatility 30 Index. The offering aims to provide returns that closely correspond to the returns provided by Nifty Alpha Low-Volatility 30 Index, subject to tracking errors.
The New Fund Offer (NFO) will open on August 3 and close on August 10. The benchmark is Nifty Alpha Low Volatility 30 TRI and the units of this ETF will be listed on NSE and BSE.
ICICI Prudential Alpha Low Vol 30 ETF provides investors a choice to take exposure to multiple factors through a single index product. It intends to counter the cyclical theory of single factor index structure strategy. The index provides exposure to a portfolio of stocks from various sectors, based on top combination of alpha and low volatility.
“ICICI Prudential Alpha Low Vol30 ETF is a multifactor smart beta strategy. This strategy addresses high sector concentration of single factor based index strategies through diversification of factor-risk exposures and exhibiting lower performance swings. Through this ETF, an investor gets access to smart beta strategy which is rule-based and cost-effective," says Nimesh Shah, MD & CEO, ICICI Prudential AMC.
By gaining exposure to ETFs based on multiple factor strategies, investors can achieve greater diversification and become less reliant on any one factor to drive returns. Owing to these benefits, globally too, investors are increasingly gravitating towards multiple factor strategies.
What is Nifty Alpha Low Volatility 30 index?
The Nifty Alpha Low Volatility 30 index consists of 30 stocks selected from Nifty 100 and Nifty Midcap 50. The weights of the stocks are derived from alpha and low volatility factor scores with individual stock weight capped at 5%.
The index methodology is factor weighted and re-balanced semi-annually. This index intends to counter the cyclicality of single factor index strategy and provides investors a choice to take exposure to multiple factors through a single index product.