HDFC Mutual Fund launches two smart beta ETFs

HDFC Mutual Fund launches two additional smart beta ETFs – HDFC NIFTY200 Momentum 30 ETF and HDFC NIFTY100 Low Volatility 30 ETF. Read on to find out more.

Smart beta is quite a compelling concept and does add some flavour to your passive investment portfolio. HDFC Mutual Fund has added two new smart beta exchange-traded funds (ETFs) to their passive kitty by launching HDFC NIFTY200 Momentum 30 ETF and HDFC NIFTY100 Low Volatility 30 ETF. The New Fund Offer (NFO) is open for subscription and closes on October 6, 2022.

Commenting on the launch, Navneet Munot, Managing Director and Chief Executive Officer, HDFC Asset Management Company Ltd said, “Smart Beta investing is popular globally with AUM rising steadily. HDFC AMC is happy to expand index solution offerings for investors that are backed by empirical research. 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 fund house has 20 years of experience in managing passive funds, which comes with highly disciplined and robust Investment and Risk Management policies and processes.”

These ETFs would be tracking NIFTY200 Momentum 30 index and NIFTY100 Low Volatility 30 index, respectively. We have analysed the performance of these indices with respect to their underlying benchmark. In order to understand their performance, we calculated 1-year rolling returns over a period ranging from October 12, 2020, to September 28, 2022.

It can be observed from the above table that, in terms of returns Nifty200 Momentum 30 outpaced its underlying index, but Nifty100 Low Volatility 30 failed to do so. However, in terms of risk (standard deviation), Nifty100 Low Volatility 30 scores over its underlying index, while Nifty200 Momentum 30 comes with higher risk. Hence, tactically making a switch between them is crucial.