Exchange-traded funds are good news for investors. ICICI Prudential Mutual Fund is launching a new exchange traded fund (ETF). This ETF will target the 30 lowest volatile stocks of the Nifty 100 index. The new fund for investment will open on March 23 and will close on April 6. The scheme has been named ICICI Prudential Nifty Low Validity 30 Index Fund of Funds. It is an open-ended fund of funds that will invest in the 30 lowest volatile large cap stocks of the Nifty 100 index. The fund will get returns as much as the benchmark on investment and its benchmark is the Nifty 100 Low-Validity Index. Talking about the past few years, the Nifty 100 Low-Volatility 30 Index has given annual returns of up to 12–16 per cent to investors.
Investment in blue chip stocks of many sectors
Nimesh Shah, managing director (MD) of asset management company ICICI Prudential Mutual Fund, says that through this scheme, investors will get access to factor-based smart beta ETFs which will help reduce risk. According to Shah, the investment in this fund will not have much impact on the market fluctuations on the investors and for this their capital will be invested in blue chip stocks of many sectors.
Included in the low-volatility stocks index
The Nifty 100 Low Validity 30 Index is a part of the Nifty 100 Index and includes stocks that have low volatility. The cap has been imposed on individual stock weight and it can be up to a maximum of 3 per cent. Apart from this, the top 3 sectors in the index are software, personal care and cement. The NAV of ICICI Prudentials Low Nifty Low Validity 30 ETF at this time (16 March 2021) is Rs 118.54. It was started on 3 July 2017 and in 3 years and 8 months it has given a return of around 13.96% CAGR.