NAM India unveils two Nifty 500 Index Funds targeting quality stocks and lower volatility for smarter investing

Nippon Life India Asset Management Limited (NAM India) has launched new open-ended index funds – the Nippon India Nifty 500 Quality 50 Index Fund and the Nippon India Nifty 500 Low Volatility 50 Index Fund. These funds are rolled out with the aim of providing investors with a unique, cost-effective, and a diversified exposure to the Indian equity market by tracking the Nifty 500 Quality 50 Index and Nifty 500 Low Volatility 50 Index respectively.

The New Fund Offer (NFO) for both the funds will open on April 16, and close on April 30. The minimum investment amount required during the NFO is ₹1000 and in multiples of ₹1 thereafter. Benchmark: Nippon India Nifty 500 Quality 50 TRI and Nippon India Nifty 500 Low Volatility 50 TRI.

The Nippon India Nifty 500 Quality 50 Index Fund offers investors exposure to a diversified portfolio of 50 financially healthy companies spanning large, mid, and small market capitalizations across various sectors. The fund follows a rule-based “smart beta” approach, focusing on the concept of quality investing. This strategy identifies financially healthy companies based on key metrics such as profitability (Return on Equity), low leverage (Debt to Equity Ratio), and earnings stability (consistent EPS growth). By tracking the Nifty 500 Quality 50 Index, the fund combines passive investment with active factor selection.

Key features of the fund

Diversification: The fund provides exposure to the top 50 Quality companies spanning across different market caps (large, mid, and small) and sectors, offering investors a diversified portfolio.

Rule-Based Approach: The fund follows a rule-based approach to stock selection, using the Quality factor.

Quality Investing: The concept of Quality Investing is based on selecting financially healthy companies. The fund focuses on companies with strong profitability, low leverage, and consistent earnings stability. Key financial metrics considered include Return on Equity (ROE), Debt to Equity (D/E) Ratio, and Earnings Per Share (EPS) growth consistency.

Low-Cost Exposure: Investors can access a diversified basket of quality stocks at a lower cost, making it an attractive option for potential long-term growth.

Arun Sundaresan, Head ETF, Nippon Life India Asset Management said, “These funds are designed to provide diversified exposure to top-performing companies across large, mid, and small-cap segments while providing targeted benefits such as low-cost entry, lower volatility, and better risk-adjusted returns. Building upon our track record in passive investments, these new offerings reflect our ongoing dedication to providing investors with quality, cost-effective investment options.”

The Nippon India Nifty 500 Low Volatility 50 Index Fund aims to capture the performance of companies with relatively lower price volatility. It offers investors exposure to a diversified portfolio of the top 50 companies—based on low volatility—from the Nifty 500 universe.

Key features of the fund

Low Volatility Strategy: This fund’s strategy focuses on companies with lower volatility, aiming to provide better risk-adjusted returns over time. This strategy has provided significant historical returns and has proved to be an anomaly to the theory that higher risk equals higher returns.

Historical Performance: The low volatility strategy has historically demonstrated relatively better performance compared to its parent index, i.e. the Nifty 500, on a CAGR and average rolling returns basis across one, three, five and ten-year periods.

NAM India has a presence in passive investments with over 23 years of experience. The company manages a diverse range of 24 ETFs (18 equity, four fixed incomes, and two commodities), 24 index funds/FoFs (12 equity, nine fixed incomes, and three funds of funds), and passive assets under management (AUM) exceeding ₹1,64,800 crore. ETF QAAUM has reached ₹1,53,854 crore as of 31st March.