Should you consider investing in Nifty Alpha Low-volatility 30 Index? Find out

If you are an investor who is looking to benefit from the long-term growth potential of equities but is wary of equity market volatility, then experts suggest you can consider investing in the Nifty Alpha Low-volatility 30 index. 

Should you consider investing in Nifty Alpha Low-volatility 30 Index? Find out
Factor-based investing tries to identify these factors and assess the investment through a factor lens.

Even though it is well-known that equity markets are volatile, keeping your emotions in check can become a challenging task. As a result, industry experts say many people end up making sub-optimal investment decisions. 

Chintan Haria, Head of Product Development and Strategy, ICICI Prudential AMC says, “While keeping away from equities is not an option, especially if one wishes to create wealth over the long term, what an investor can consider is investing in products which can help address their challenges.”

One of the ways to harness the growth potential of equities while mitigating some of the equity market-related risks is factor-based investing. This approach to investing Haria points out, “combines the benefits of both active and passive styles of investing in striking a balance between growth and downside protection. Generally, there are a host of factors that impact the price of a stock.” 

Factor-based investing tries to identify these factors and assess the investment through a factor lens.

The most prevalent factors available today, according to experts are largely based on alpha, value, momentum, and low volatility. Today an investor has the choice of single or multi-factor investing. 

Haria explains, “In a multi-factor strategy, investment managers look at two or more factors while making investment decisions. By gaining exposure to multiple factors, you can achieve greater diversification.”

If you are an investor who is looking to benefit from the long-term growth potential of equities but is wary of equity market volatility, then experts suggest you can consider investing in the Nifty Alpha Low-volatility 30 index. 

This is a multi-factor index that is based on two different factors, namely alpha and low volatility. Haria explains, “Alpha is simply the returns that are generated over and above the benchmark return. Volatility is the fluctuations in the price of a stock. By investing in a Nifty Alpha Low-volatility 30 index, an investor gets exposure to 30 stocks chosen from a universe of the Nifty 100 Index and Nifty Midcap 50 Index.” 

Note that, these stocks are those names which are relatively less volatile and have the potential to outperform the broader market, according to experts. 

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