Anand Vardarajan, Chief Business Officer, Tata Asset Management
MUMBAI: Tata Asset Management Company has announced the launch of the Tata Nifty200 Alpha 30 Index Fund that aims to track the performance of the top 30 companies with high alpha within the Nifty200 Index. The alpha factor-based passive investing strategy seeks to benefit from continued trends in the market. It adjusts to changing market conditions and increases the coverage and weightage of outperforming sectors/stocks and underweights underperforming sectors/stocks.
The Index’s methodology measures excess return generated by the portfolio relative to its benchmark index Nifty200 after adjusting for risk and volatility. Based on the alpha factor, the fund identifies and includes stocks that generate returns above the broad market return and risk-free return, giving more importance to stocks that generate high excess returns per unit of risk. As a result, Nifty200 Alpha 30 Index has been able to outperform market cap-weighted indices like Nifty200 during market upturns. However, it should be noted that Nifty200 Alpha 30 Index may underperform vis-à-vis Nifty200 during market downturns.
At the launch of the index fund, Anand Vardarajan, Chief Business Officer, Tata Asset Management, said, “This strategy aims to capture extra returns over what Nifty200 index could provide by selecting the top 30 stocks which can deliver alpha. This is yet another differentiated offering from our side to build our product portfolio. We believe these could add value to clients when it comes to constructing and diversifying their investment portfolios. ”
While sector exposure will change to reflect the outperforming sectors, the index will maintain a stock cap of 5% which makes the index diversified across sectors and stocks.
Index Methodology:
The Nifty200 Alpha 30 Index methodology measures excess investment return relative to the Benchmark index Nifty200 using 1-year trailing price. The top 30 stocks with the highest Jensen’s Alpha are chosen, allocating more weight to stocks that generate high Alpha per unit of risk, i.e., volatility. Our Tata Nifty200 Alpha 30 Index Fund replicates this index.
Index is re-balanced on a quarterly basis using data ending last trading day of February, May, August, and November. The stocks should have a minimum listing history of 1 year as on the cut-off date and should be available for trading in derivative segment (F&O) as on the effective date.
Enclosed below are the details about the Tata Nifty200 Alpha 30 Index Fund:
Enclosed below are the details about the Tata Nifty200 Alpha 30 Index Fund:
Scheme NameTata Nifty200 Alpha 30 Index FundNFO Period19th August, 2024 to 2nd September, 2024Scheme re-opens on or before11th September, 2024Investment ObjectiveThe investment objective of the scheme is to provide returns, before expenses, that commensurate with the performance of Nifty200 Alpha 30 Index (TRI), subject to tracking error. There is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns.Type of SchemeAn open-ended scheme replicating / tracking Nifty200 Alpha 30 Index (TRI).Fund ManagerKapil MenonBenchmarkNifty200 Alpha 30 Index (TRI)Min. Application Amount (During NFO)Rs. 5,000/- and in multiple of Re.1/- thereafterLoad StructureEntry Load: Not Applicable (Pursuant to provision no. 10.4.1.a of SEBI Master Circular on Mutual Fund dated May 19, 2023, no entry load will be charged by the Scheme to the investor)Exit Load: 0.25 % of the applicable NAV, if redeemed on or before 15 days from the date of allotment.Exit load (if any) charged to the unit holders by the Mutual Fund on redemption (including switch-out) of units shall be credited to the scheme net of Goods & Services Tax. Goods & Services Tax on exit load, if any, shall be paid out of the exit load proceeds.