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What is the Nifty 100 Low Volatility 30 Index? How Does It Work? Should You Invest?

What is the Nifty 100 Low Volatility 30 Index? How Does It Work? Should You Invest?

Published on 06 June 2022 .Views 22 .Comments 0
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In this article, we will be discussing the Nifty Low Volatility 30 Index, what is it, and how does it works? Should You Invest? Get all your answers about this Index in the article, so, let’s get started.

Nifty 100 Low Volatility 30 Index:

  • NIFTY100 Low Volatility 30 Index aims to measure the performance of the low volatile securities in the large market capitalisation segment.
  • The Top 30 stocks of the Nifty 100 were selected on basis of low volatility calculated by measuring the standard deviation of the stocks.
  • The more the standard deviation the more volatile stocks and vice-versa. Stable stocks are those which has good earning visibility.
  • This fund is basically for the conservative and low-risk taker investor as it involves low risk. Rebalancing of this index takes place every quarter.

Selection criteria:

  • Securities should have a minimum listing history of 1 year.
  • Securities should be available for trading in the derivatives segment (F&O).
  • Should be part of NIFTY 100.
  • Top 30 ranked stocks with the least volatility form part of the index.
  • At the time of index reconstitution, a company that has undergone a scheme of arrangement for a corporate event such as spin-off, capital restructuring, etc. would be considered eligible for inclusion in the index.
  • DVR shares are not eligible for inclusion in the index.

Replacement Criteria:

  • At the time of review, if the existing constituent of the index is ranked within the top 60 based on the low volatility score, then the stock has retained the index.

Recent Change:

Index Constituents:

 

Return Performance:

  • This weightage is approx.  with the highest weightage given to Nestle.
  • FMCG and IT sectors are the lowest volatile sector

  • Trailing return is either at par or above nifty 100.

  • Calendar year return is fluctuating but given a better return than Nifty 100 and in the last 10 years, it has not given a negative return where Nifty100 has given negative returns in 2015.

  • Rolling returns are also good and have not turned negative.

Risk Ratio:

  • The standard deviation of this index is around 16 whereas the standard deviation of Nifty 100 is around 22.
  • The beta of this index is around .7 which is significantly low than the 1.
  • Alpha is also generating; PE is more or less equal to nifty 100.

 

How to invest in this index?

There is 3 option available to invest in this fund.

What should investors do?

Overall, this ETF (Exchange Traded Fund) has performed very well as compared Nifty 100 index and has not turned negative even when the nifty 100 has given a negative return. It is low risky ETF with low return, one can choose it according to their risk-taking appetite and return expectation.

Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.

Originally Published On:https://blog.investyadnya.in/what-is-the-nifty-100-low-volatility-30-index-how-does-it-work-should-you-invest%ef%bf%bc/

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