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Kotak Mutual Fund has launched a new index fund, Kotak Nifty 100 Low Vol 30 ETF, that tracks the Nifty 100 Low Vol 30 TRI. The new fund offer (NFO) is open for subscription from March 15 to March 22, 2022. Kotak Nifty 100 Low Vol 30 ETF will be managed by three fund managers; Abhishek Bisen, Devender Singhal and Satish Dondapati. Here are the key details of the NFO:
About the strategy
Kotak Nifty 100 Low Vol 30 ETF would be the second to mimic 'Nifty 100 Low Vol 30 TRI' after ICICI Prudential Nifty Low Vol 30 ETF. The underlying index consists of top-30 least volatile stocks among the top-100 companies by market cap on the National Stock Exchange (NSE), where the least volatile constituent gets the highest weight (capped at 3 per cent during quarterly review) and so on. Volatility here is calculated as the standard deviation of daily price returns for the last one year.
In terms of sector diversification, the Nifty 100 Low Volatility 30 index seems to be heavily tilted towards Consumer goods, but the Nifty 100 index is tilted more towards Financial services and IT, in nearly equal proportion. Around 75 per cent of both the indices are concentrated towards the top-5 sectors.
It must be noted that both these indices are market-cap based and thus, both these allocations would undergo a change as the market cap of their constituent companies change, whenever they undergo re-balancing, i.e., about twice a year.
About the performance
We compared the five-year rolling returns of the Nifty 100 Low Vol 30 index with the Nifty 100 TRI. We see that even though the fund has outperformed the broader Nifty 100 TRI over the last decade, its performance has reduced since 2017. In the past 6 months, the index has performed at par with the Nifty 100 TRI. Though, it is worth noting that these are historical trends and cannot be extrapolated into the future.
About the AMC
Kotak Mutual Fund has been in the business since 1998. As of February 2022, the AMC managed assets worth about Rs 2.75 lakh crore, ranking itself sixth in the 41-player mutual fund industry.
In the open-end equity funds segment, the fund house manages an asset base of around Rs 99,000 crore across 27 domestic funds. Out of this, the share of passive equity (index funds/ETFs) is only Rs 13,000 crore, spread among 13 funds.
Also read: 3 questions you should ask before investing in an NFO
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