HDFC Mutual Fund has launched the Nifty100 Low Volatility 30 Index Fund, an innovative offering designed to provide investors with exposure to a basket of low-volatility stocks from the Nifty 100. This fund aims to offer stable returns with reduced risk, making it an attractive option for conservative investors.
- Fund Name: HDFC Nifty100 Low Volatility 30 Index Fund
- NFO Period: June 21, 2024 to July 05, 2024
- Benchmark Index: Nifty100 Low Volatility 30 Index
- Minimum Investment: ₹500 (lump sum)
The primary objective of the fund is to provide long-term capital appreciation by replicating the performance of the Nifty100 Low Volatility 30 Index. This index comprises the 30 least volatile stocks from the Nifty 100, selected based on their volatility scores over the last year.
1. Stability: Low volatility stocks are typically more stable and less affected by market fluctuations, offering more consistent returns.
2. Risk Management: These funds are ideal for risk-averse investors looking to minimise their exposure to market volatility.
3. Diversification: Investing in a diversified portfolio of low-volatility stocks can enhance overall portfolio stability.
The fund will follow a passive investment strategy by closely tracking the Nifty100 Low Volatility 30 Index. This approach ensures that the fund's performance closely mirrors the index, providing investors with returns that are in line with the least volatile stocks from the Nifty 100.
- Equity and Equity-Related Instruments: 95-100% (primarily the constituents of the Nifty100 Low Volatility 30 Index)
- Debt and Money Market Instruments: 0-5% (for liquidity management)
Who should invest in the HDFC Nifty100 Low Volatility 30 Index Fund NFO?
The HDFC Nifty100 Low Volatility 30 Index Fund is suitable for:
- Conservative investors seeking stable returns with lower risk.
- Investors looking for exposure to a diversified portfolio of low-volatility stocks.
- Those aiming for long-term capital appreciation with reduced exposure to market volatility.
1. Lower Volatility: Focuses on stocks with historically lower volatility, providing a cushion against market fluctuations.
2. Cost-Effective: Passive management typically incurs lower fees compared to actively managed funds.
3. Ease of Investment: A minimum investment requirement of ₹500 makes it accessible to a broad range of investors.
1. Market Risk: Although the fund targets low-volatility stocks, it is still subject to overall market risks.
2. Tracking Error: The fund's performance may slightly deviate from the benchmark index due to a tracking error.
3. Sector Concentration: Depending on the composition of the index, there may be sector concentration risk.
The HDFC Nifty100 Low Volatility 30 Index Fund NFO is an excellent choice for investors looking to achieve long-term capital appreciation with reduced risk. By focusing on low-volatility stocks, the fund aims to provide stable returns, making it an attractive option for conservative investors. As with any mutual fund investment, potential investors should consider their risk tolerance and investment objectives before investing.
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