Bandhan Mutual Fund has launched the Bandhan Nifty Alpha 50 Index Fund. The new scheme is an open-ended index fund tracking Nifty Alpha 50 Index. The new fund offer opens for subscription on October 25, 2023 and closes on November 6, 2023. The new fund is a passive scheme following a rule-based investment approach.
The scheme is an alpha factor-based fund, which picks up investment options based on factors and rules set by the fund house.
According to the fund house, the Nifty Alpha 50 index will follow a structured, quantitative-led process of assigning weights to the securities based on alpha values, where the security with the highest alpha in the index is assigned the highest weight. A rule-based investment approach reduces bias when making investment decisions. The alpha strategy adapts to the changing market conditions, leveraging investment opportunities across segments.
"Traditional passive funds are designed to mimic their benchmark and thus offer broad market-based returns. Bandhan Nifty Alpha 50 Index Fund aims to generate outperformance by selecting stocks with specific factors that produce potentially higher risk-adjusted returns compared to the market. NSE data, as of September 30, 2023, indicate that the Nifty Alpha 50 Index has outperformed the Nifty 50 Index and the Nifty 500 Index, generating an alpha of ~5% over these broad-based indices, albeit with higher volatility. Savvy Investors seeking to add an aggressive strategy to their portfolio could include Bandhan Nifty Alpha 50 Index Fund, to enhance the growth potential of the portfolio," said Vishal Kapoor, CEO, Bandhan AMC.
