Factor investing gets popular: Axis Nifty500 Value 50 Index Fund launched

Axis Mutual Fund on Thursday launched its new fund offer- Axis Nifty500 Value 50 Index Fund. This open-ended index fund aims to replicate the performance of the Nifty500 Value 50 Total Return Index (TRI). The New Fund Offer (NFO) opens on October 04, 2024 and closes on October 18, 2024.  

Understanding Factor Investing

Factor investing is a strategic approach that seeks to capitalize on the underlying drivers of market returns. By identifying and systematically targeting specific characteristics, such as quality, value, size, momentum, and low volatility, investors can construct portfolios that are more aligned with their investment objectives. Factor Investing, has a proven track record of outperforming the market across various geographies, asset classes, and economic cycles. 

What is the  Axis Nifty500 Value 50 Index Fund

Value Investing is a subset of factor investing that target securities that are undervalued or less expensive. The factor ‘Value’ is one of the oldest and widely used factor globally.

• The scheme objective is to invest in stocks comprising the Nifty500 Value 50 Index (the index) and aim to provide returns before expenses that correspond to the Nifty500 Value 50 TRI subject to tracking error. 
• The eligible stocks in the Index are picked from the universe of Nifty 500 Index constituents that includes large, mid and small cap stocks. 
• The top 50 stocks are selected based on the Price to Earnings (P/E), Price to Book (P/B), Price to Sales (P/S) and dividend yield metrics. 
• The Nifty500 Value 50 Index offers ‘True to Label’ exposure to ‘Value’ factor. 
• Historically Nifty500 Value 50 TR Index has outperformed the Nifty500 despite its decadal (2009-2019) underperformance and a large portion of Value portfolio tend include PSU stocks.

 “India is still in a nascent stage when it comes to Factor investing, with the theme having gained acceptance amongst investors very recently. At Axis Mutual Fund, our objective has always been to provide investors with innovative and investor centric investment solutions. Given this belief, our latest fund, the Axis Nifty500 Value 50 Index Fund provides a convenient way for investors to participate in the true to label value strategy at relatively low cost," said B. Gopkumar, MD & CEO of Axis AMC.

 Who Should Invest?

• Long-term investors seeking exposure to the True to label value companies in India
• Experienced investors aiming to complement their portfolio with a passive investment strategy

"Despite being a relatively new category in India, Factor-based investing is a promising space and has grown from Rs 300 crore to Rs 30,000 crore in a matter of only 4 years. Value investing is part of factor-based investing that is designed to offer investors an opportunity to gain exposure to 50 stocks that are attractive in terms of their valuation multiples, aiming for long-term wealth creation," said  Ashish Gupta, Chief Investment Officer of Axis AMC.

Key Attributes of the Axis Nifty500 Value 50 Index Fund, according to Axis MF

 Diversified Exposure: The fund provides exposure to in-expensive companies in terms of their valuation multiples. The index methodology caps maximum weight of stocks at 5% and sector at 25% to maintain sufficient diversification.

 Low Cost: As a passively managed index fund, it offers lower expenses compared to actively managed funds, providing a cost-effective investment option

Aiming Wealth Creation over Long Term: Axis Nifty500 Value 50 Index Fund aims to offer long run wealth creation for investors. Historically it has outperformed broad-market indices over long term.

Minimum Application size the scheme is kept Rs 100 and multiple of Re 1 thereafter. The Index will be rebalanced on a semi-annual basis in June and December.

Highlights:

• Category: Open-Ended Index Fund
• ·Benchmark: Nifty500 Value 50 TRI
• Fund Managers: Mr. Karthik Kumar and Mr. Hitesh Das
• NFO Period: Oct 04, 2024 to Oct 18, 2024
• Minimum Investment: Rs.100 and in multiples of Re. 1/- thereafter
•  Exit Load:
• 0.25%: If redeemed/ switched out within 15 days from the date of allotment
• Nil: If redeemed/ switched out after 15 days from the date of allotment