Steady Growth, Less Stress: Discover the Nifty Low Volatility Edge

economictimes.indiatimes.com:

Nifty 100 Low Volatility 30 ETF represents an increasingly popular investment strategy aimed at offering stability in volatile markets. This exchange traded fund (ETF) is a passive fund, meaning it closely follows the Nifty 100 Low Volatility 30 index, and invests in stocks with lower-than-average volatility. The primary goal is to minimise sharp price swings, providing investors a smoother ride in their equity investments.

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Over the years, indices like the Nifty 100 Low Volatility 30 have evolved beyond being simple market representations. Today, they represent well-defined investment strategies capable of generating returns that can potentially exceed those of traditional market-cap-based indices. Such strategies, known as “Smart Beta,” target specific factors, like low volatility, that have shown to influence returns.

Low volatility, for instance, is a factor where investments are selected based on their ability to lower risk while maintaining a reasonable return profile. In essence, low-volatility investments challenge the notion that higher returns require taking on higher risks. Instead, the ETF’s portfolio emphasises stocks that have historically seen fewer and smaller price declines. During market downturns, these stocks tend to fall less than higher-risk stocks.

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