IDFC Mutual Fund launches Nifty100 Low Volatility 30 Index Fund

IDFC Mutual Fund has launched the IDFC Nifty100 Low Volatility 30 Index Fund, an open-ended index scheme that will consist of the 30 least volatile stocks from the large cap universe replicating the Nifty100 Low Volatility 30 Index. The New Fund Offer opens on September 15 and closes on September 23.

“As Indians move from being savers to becoming investors, stock market volatility could be unnerving for many new investors, often leading to impulsive reactions, unjustified investment decisions and regret. The Low-volatility strategy provides investors an opportunity to benefit from the high return potential of equities while aiming to reduce volatility, helping investors stay true to their overall investment goals. This Index has provided a compelling risk-reward opportunity over the years, yielding relatively higher returns with relatively lower risk as against major stock indices,” said Vishal Kapoor, CEO, IDFC AMC.

The Nifty100 Low Volatility 30 Index follows a disciplined process of assigning a higher weight to less volatile stocks and a lower weight to high volatility stocks. According to the press release, as on August 30, 2022, the Nifty100 Low Volatility 30 Index yielded a relatively higher return of 15.4% p.a. as against 14.6% p.a. for the Nifty 100 Index and 14.0% p.a. for the Nifty 50 Index over a rolling 10-year timeframe. At the same time, it has demonstrated a stronger ability to withstand the impact of volatility where the return per unit of risk is 1.05 for Nifty100 Low Volatility 30 Index against 0.85 for Nifty 100 Index and 0.83 for Nifty 50 Index, clearly demonstrating its advantage.

According to the fund house, the dynamic nature of this strategy of investing could help smoothen the investment journey for investors. The fund follows a differentiated strategy, making it an effective investment opportunity for long-term equity investors, enabling them to benefit from the best of both worlds – relatively higher returns over the long term combined with relatively lower volatility.