India Index Services & Products Ltd (IISL), an NSE group company, today launched four multi- factor equity indices, which will provide diversified exposure with varied risk-return profile to investors. These indices are – Nifty Alpha Low-Volatility 30; Nifty Quality Low-Volatility 30; Nifty Alpha Quality Low-Volatility 30 and Nifty Alpha Quality Value Low-Volatility 30. They are designed to reflect the performance of portfolio of stocks that are selected based on combination of two or more factors selected from four single factors – Alpha, quality, value and low-volatility.
“Investments where stocks are screened based on multiple factors have gained popularity among global investment community. “By combing the well-established factors used in active investment and rules based framework of passive investment, multi-factor indices tend to have better risk return characteristics compared to traditional market capitalisation and single-factor based index strategies over longer time frame,” IISL CEO Mukesh Agarwal said in a statement.
The new indices intend to counter the cyclicality of single-factor index strategies and provide investors a choice to take exposure to multiple factors through a single index product. Multifactor indices tend to exhibit lower cyclicality and better portfolio diversification as compared to traditional market capitalisation and single factor indices. The base date for these four indices is April 1, 2005 with a base value of 1,000 and the index composition will be reconstituted semi-annually.