HDFC Mutual Fund launches three new smart beta ETFs

Date : 30/06/2023
Read: 3 mins

Launch of new smart beta ETFs by HDFC Mutual Fund

Mutual fund companies continuously try to enhance their product portfolio to offer investors more options for investments. To this end, HDFC Mutual Fund has launched three new Exchange Traded Funds that work on the smart beta ideology of investment.

What is the smart beta ideology?

The smart beta ideology involves choosing securities based on a number of factors, excluding market capitalization. For instance, if the underlying index is Nifty50, the ETF would invest in the stocks of Nifty 50, but the stock selection would not be based on market capitalization. Instead, it would be based on other predefined factors like liquidity, rolling returns, and quality scores. Etc.

Why smart beta ideology?

The concept of smart beta investing is gaining momentum in international markets as people are increasingly waking up to its benefits. The ideology gives you a diversified portfolio that follows a specific factor. This can convert to better risk-adjusted returns over the long term, and that too at a cost-effective rate.

Mutual fund ETFs launched by HDFC

HDFC Mutual Fund has launched three ETFs that follow the smart beta ideology. Here’s a look at them –

Nifty 100 Quality 30 ETF - In this ETF, the underlying index is the Nifty 100 index. Out of the 100 stocks listed in the Nifty 100 index, the ETF picks 30 stocks on the basis of their quality scores. On the other hand, the quality score is calculated considering the company’s leverage, growth in Earnings Per Share (EPS) and Return on Equity (ROE). The performance of these parameters is measured over the last five years to calculate the quality score. Then, the companies with the highest scores are picked.
Nifty 50 Value 20 ETF - Under this ETF, the Nifty 50 index is the underlying index. From this index, 20 blue chip value stocks are picked, which offer the highest liquidity.
Nifty Growth Sectors 15 ETF - In this scheme, 15 companies of the NSE (National Stock Exchange) are selected, provided that they offer equity derivatives. The weights of the stocks are restricted to 15%.

Other details

Some of the other details of the schemes are as follows –

The minimum required investment is Rs.500.
There’s no exit load.
The fund manager is Krishan Kumar Daga.
The NFO was between the 9th and 20th of September, 2022.

Check out these new ETFs and invest in them if they align with your investment strategy and financial goals. Following the smart beta concept of investment, these new ETFs can deliver attractive returns on your investments.