Mirae Asset Mutual Fund launched a new exchange-traded fund, Mirae Asset Nifty 200 Alpha 30 ETF, on October 9, 2023. The NFO will close on October 18, 2023.
This scheme is replicating or tracking Nifty 200 Alpha 30 TRI. The Nifty 200 Alpha 30 Index consists of 30 large and midcap stocks selected from its parent Nifty 200 index based on 'Jensen's Alpha'. An investment's excess return, when compared to the market, is measured by Jensen's 'Alpha'. The weight of stocks in the index is based on their alpha scores, i.e. stocks with higher alpha (outperformance) will be allocated higher weights in the portfolio.
The minimum application amount during the NFO period is Rs. 5000 and in multiple of Rs 1 after that. ETFs are traded on stock exchanges. Mirae Asset Nifty 200 Alpha 30 ETF will be listed on NSE and BSE within five days of allotment. There is no exit load involved in the scheme.
Says Siddharth Srivastava, Head ETF Products, Mirae Asset Investment Managers, "The Nifty 200 Alpha 30 ETF will seek to capture alpha and momentum strategy. The portfolio will consist of 30 large and midcap stocks, where selection and weighting are based on the stock's alpha instead of free float market cap."
"With frequent quarterly rebalancing, portfolio exposure to large and midcap segments as well as to sectors will evolve based on the performance cycle. In a growing market like India, Alpha strategy has done well historically in the long term, especially in the bull markets, though with higher volatility," Srivastava says.
Ninety-five per cent of investment will be made in such equity instruments and the remaining 5 per cent in money market instruments or debt securities.
The Nifty 200 Alpha 30 ETF is a Smart Beta ETF that captures factors like alpha, low volatility, quality, etc. and seeks to select and weigh stocks based on these factors to target a certain performance behaviour and risk and return profile.
In short, the fund aims to adjust to changing market conditions and increase the coverage and weight to currently outperforming stocks and sectors. However, the risk is that alpha strategy-based investing is based on the simple idea that stocks that have performed well in the past would potentially continue to perform well.
At the global level, there are 1281 smart beta equity ETFs with 2,655 listings with assets under management of USD 1.27 trillion as of the end of February 2023, the release said.