NFO review: ICICI Prudential Alpha Low Vol 30 ETF FOF is open for subscription
This offering is an open-ended fund of fund scheme investing in ICICI Prudential Alpha Low Volatility 30 ETF
ICICI Prudential Mutual Fund has announced the launch of ICICI Prudential Alpha Low Vol 30 ETF FOF, an open-ended FOF scheme investing in ICICI Prudential Alpha Low Vol 30 ETF. The offering aims to provide returns before expenses that closely correspond to the total return of the underlying index, that is, Nifty Alpha Low Volatility 30 TRI, subject to tracking errors.
The New Fund Offer (NFO) opened on September 01, 2021, and will close on September 15, 2021. The benchmark for this FOF is Nifty Alpha Low Volatility 30 TRI.
Multi-Style Factor based funds, also known as Smart Beta Strategy funds, are gaining popularity among investors globally for the synergies of benefits it has to offer in terms of enhanced diversification, reduced volatility, alpha generating opportunities, etc.
ICICI Prudential Alpha Low Vol 30 ETF FOF provides investors exposure to a combination of alpha generation opportunities with reduced volatility by investing in ICICI Prudential Alpha Low Vol 30 ETF.
This multi-style factor exposure endeavors to provide growth with stability to its investors. Investors looking to create wealth over long-term via multi-style factor strategy may opt to invest in ICICI Prudential Alpha Low Vol 30 ETF FOF, says Chintan Haria, Head- Product Development & Strategy, ICICI Prudential AMC.
What the product gives to investors
Through this FOF, investors can access a portfolio of stocks from various sectors, based on top combination of alpha and low volatility. It intends to counter the cyclical theory of single factor index structure strategy. While investing through FOF, an investor without a Demat account too can invest in an ETF through lump sum or SIP.
Why should investors consider ICICI Prudential Alpha Low Vol 30 ETF FOF
The fund provides exposure to multiple factors through a single index product. The product can counter the cyclicality of single factor index strategy. The fund allows people without a demat account to invest in an ETF through lump sum or SIP. This is a smart and low cost opportunity to invest in large and midcap companies.
Smart beta ETF that invests in low volatile companies/stocks that can help is generating alpha. Plus, the fund can exhibit less performance swings due to index nature of low volatility.
About the underlying index
The Nifty Alpha Low Volatility 30 index comprises 30 stocks selected from Nifty 100 and Nifty Midcap 50. The weights of the stocks are derived from alpha and low volatility factor scores with individual stock weight capped at 5%. The index methodology is factor weighted and re-balanced semi-annually.
The top three sectors in the index are Consumer Goods (40.8%), IT (21.6%) and Pharma (16.8%). The index has outperformed the broad market indices 8 out of 11 times until 2020. Data Source: MFI Explorer. Data as on August 18, 2021.
Note: The new fund offer of ICICI Prudential Alpha Low Vol 30 ETF FOF is available for investing on Wealthzi.com.