Unlocking Potential: First Multi-Factor-Based ETF In India by Mirae Asset

Discover India’s first multi-factor-based ETF by Mirae Asset. Gain exposure to small-cap stocks with momentum and quality parameters. Diversify your portfolio efficiently.

Introducing India’s First Multi-Factor-Based ETF

Mirae Asset, a leading investment management firm, has recently announced the launch of India’s first multi-factor-based Exchange-Traded Fund (ETF) focused on the Nifty Small Cap 250 index. This innovative offering, named the Mirae Asset Nifty Small Cap 250 Momentum Quality 100 ETF, aims to provide investors with exposure to a diversified portfolio of small-cap stocks while incorporating key momentum and quality parameters for selection.

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Understanding the Concept Behind the ETF Launch

In a recent interview on ET Now’s “The Money Show,” Siddharth Srivastava, Head of ETF Products and Fund Manager at Mirae Investment Manager shed light on the rationale behind introducing a multi-factor-based ETF in the small-cap category. Srivastava highlighted the growing interest among investors in small-cap stocks and emphasized the need for a robust investment strategy that combines momentum and quality factors. He stressed the significance of creating a transparent portfolio that can potentially outperform actively managed funds while offering downside protection during market corrections.

First Multi-Factor-Based ETF In India by Mirae Asset

Mitigating Downside Risk Through Factor Investing

Factor investing, particularly momentum and quality factors, has gained popularity in the Indian market, especially in the realm of passive investing. Srivastava explained that selecting companies based on profitability metrics, financial health, and earning stability can contribute to building a resilient portfolio that withstands market volatility and downturns. By focusing on these fundamental factors, the ETF aims to mitigate downside risk and deliver consistent performance over time.

Choosing Between ETFs and Index Funds

Investors often face the dilemma of choosing between ETFs and index funds for their investment needs. Srivastava highlighted the advantages of ETFs, such as intraday trading flexibility and seamless entry and exit options on exchanges. Additionally, for investors preferring a non-demat route or systematic investment plans (SIPs), the ETF fund of fund provides an alternative avenue to gain exposure to the underlying index.

Balancing Portfolio Allocation

Addressing concerns about over-diversification, Srivastava advocated for a balanced approach that combines both active and passive strategies. He emphasized the importance of diversifying investments across quality active funds and passive funds like ETFs. This strategy allows investors to navigate through different market cycles efficiently and optimize returns while managing risks effectively.

Cost-Effectiveness of ETF Investments

One of the key advantages of ETFs lies in their cost-effectiveness compared to actively managed funds. Srivastava pointed out that the expected total expense ratio (TER) of the Mirae Asset Nifty Small Cap 250 Momentum Quality 100 ETF is significantly lower, making it an attractive option for cost-conscious investors seeking exposure to the small-cap segment.

Closing Remarks and NFO Details

The Mirae Asset Nifty Small Cap 250 Momentum Quality 100 ETF NFO is currently open until February 21st, offering investors an opportunity to capitalize on India’s first multi-factor-based ETF. Additionally, the fund of fund NFO remains open until February 28th, providing investors with alternative avenues to access the underlying index. This launch marks another milestone in the evolution of India’s ETF landscape, offering investors innovative solutions to diversify their portfolios and achieve their investment objectives.

In conclusion, Mirae Asset’s pioneering initiative underscores the growing trend toward factor-based investing in India’s capital markets. By combining momentum and quality factors, the ETF aims to deliver superior risk-adjusted returns, providing investors with a compelling opportunity to participate in the potential growth of the small-cap segment.

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