What are Smart Beta funds? Which are the top Smart Beta funds for investing in 2022?

Smart Beta funds were launched in the Indian financial market 5 years ago. Since then, these funds have been a topic of interest for investors. The number of smart beta funds in the financial market has progressed to 35.

The top Smart Beta funds

India's investors always look for different investment opportunities and diversify their portfolios. Smart Beta Funds are one such opportunity which has become prominent in recent years. Read on to understand Smart Beta funds and how to choose the right one.

What are Smart Beta funds?

Smart Beta funds are a modified version of Exchange-traded funds that depend upon an index for performance. However, the index in the case of Smart Beta Funds is adjusted to give more weightage to companies with the preferred attributes such as:

1. The market capitalization of the company
2. Growth of the revenue of the company
3. The movement in prices of the shares of the company
4. The dividend growth of the company.
5. Companies with low volatility in the financial market

Also read: Best ETF to invest in India 

How can you choose the right Smart Beta fund?

Choosing a smart beta fund can be difficult for investors, considering that the concept of smart beta funds is relatively new. Investors must consider the following factors while choosing a Smart Beta Fund:

The factors are taken into consideration by the Smart Beta fund for choosing the stocks. An investor may be looking to consider those with high growth in terms of revenue even when they don't have low volatility. 
The index strategy on which the Smart Beta fund is based, such as the Market Capitalization based index or equal weight index, should be analyzed. 
The Smart beta fund must be aligned with the investor's risk profile. The investor must consider the risk associated with the fund and invest only when the risks are acceptable. 
The purpose behind investing in a Smart Beta fund must be considered. For some investors, the smart beta fund could be a way of diversifying their portfolio instead of looking for short-term profits. 

Which are the top Smart Beta funds in India for the year 2022?

Among the 35 Smart Beta funds in the Indian financial market, 5 Smart Beta funds have completed 5 years and performed well for investors. 

1. Nippon India ETF Nifty 50 Value 20 

  • 3-year return: 20.2 per cent
  • 5-year return: 16.4 per cent 
  • Asset Under Management: Rs 70 crores

2. Kotak Nifty 50 Value 20 ETF

  • 3-year return: 19.9 per cent
  • 5-year return: 16.2 per cent 
  • Asset Under Management: Rs 38 crores

3. ICICI Pru Nifty 50 Value 20 ETF

  • 3-year return: 19.9 per cent
  • 5-year return: 16.2 per cent 
  • Asset Under Management: Rs 58 crores

4. ICICI Pru Nifty 100 Low Volatility 30 ETF

  • 3-year return: 15.3 per cent
  • 5-year return: 12.5 per cent 
  • Asset Under Management: Rs 1660 crores

5. DSP Nifty 50 Equal Weight Index

  • 3-year return: 18.9 per cent
  • 5-year return: 10.5 per cent 
  • Asset Under Management: Rs 456 crores

Also watch: Smart Beta funds by ET Money 

Smart Beta funds are a unique opportunity for investors to diversify their portfolios and earn profits. Every investor should be on the lookout for the top smart beta funds in the financial market.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

India's investors always look for different investment opportunities and diversify their portfolios. Smart Beta Funds are one such opportunity which has become prominent in recent years. Read on to understand Smart Beta funds and how to choose the right one.

What are Smart Beta funds?

Smart Beta funds are a modified version of Exchange-traded funds that depend upon an index for performance. However, the index in the case of Smart Beta Funds is adjusted to give more weightage to companies with the preferred attributes such as:

1. The market capitalization of the company
2. Growth of the revenue of the company
3. The movement in prices of the shares of the company
4. The dividend growth of the company.
5. Companies with low volatility in the financial market

Also read: Best ETF to invest in India 

How can you choose the right Smart Beta fund?

Choosing a smart beta fund can be difficult for investors, considering that the concept of smart beta funds is relatively new. Investors must consider the following factors while choosing a Smart Beta Fund:

The factors are taken into consideration by the Smart Beta fund for choosing the stocks. An investor may be looking to consider those with high growth in terms of revenue even when they don't have low volatility. 
The index strategy on which the Smart Beta fund is based, such as the Market Capitalization based index or equal weight index, should be analyzed. 
The Smart beta fund must be aligned with the investor's risk profile. The investor must consider the risk associated with the fund and invest only when the risks are acceptable. 
The purpose behind investing in a Smart Beta fund must be considered. For some investors, the smart beta fund could be a way of diversifying their portfolio instead of looking for short-term profits. 

Which are the top Smart Beta funds in India for the year 2022?

Among the 35 Smart Beta funds in the Indian financial market, 5 Smart Beta funds have completed 5 years and performed well for investors. 

1. Nippon India ETF Nifty 50 Value 20 

  • 3-year return: 20.2 per cent
  • 5-year return: 16.4 per cent 
  • Asset Under Management: Rs 70 crores

2. Kotak Nifty 50 Value 20 ETF

  • 3-year return: 19.9 per cent
  • 5-year return: 16.2 per cent 
  • Asset Under Management: Rs 38 crores

3. ICICI Pru Nifty 50 Value 20 ETF

  • 3-year return: 19.9 per cent
  • 5-year return: 16.2 per cent 
  • Asset Under Management: Rs 58 crores

4. ICICI Pru Nifty 100 Low Volatility 30 ETF

  • 3-year return: 15.3 per cent
  • 5-year return: 12.5 per cent 
  • Asset Under Management: Rs 1660 crores

5. DSP Nifty 50 Equal Weight Index

  • 3-year return: 18.9 per cent
  • 5-year return: 10.5 per cent 
  • Asset Under Management: Rs 456 crores

Also watch: Smart Beta funds by ET Money 

Smart Beta funds are a unique opportunity for investors to diversify their portfolios and earn profits. Every investor should be on the lookout for the top smart beta funds in the financial market.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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