Mirae Asset launches India’s first multi factor-based ETF on Nifty Smallcap250 Index: Should you invest?

Mirae Asset Mutual Fund on Monday, February 12, launched Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF, marking the country's first multi-factor-based ETF (exchange traded fund) on the Nifty Smallcap 250 Index. The open-ended new fund offer (NFO) will be available for subscription till February 21, 2024.

Additionally, the ‘Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF Fund of Fund’ will open for subscription on February 15, 2024 and close on February 28, 2024.

Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF aims to generate returns commensurate with the performance of the Nifty Smallcap 250 Momentum Quality 100 Total Return Index, subject to tracking error, the mutual fund house said.

The minimum initial investment during NFO in the scheme will be ₹5,000 and multiples of ₹1 thereafter.

The scheme will be managed by Ekta Gala and Vishal Singh, offering investors sector-agnostic exposure within the small-cap category by leveraging a combination of factors.

Mirae Asset Mutual Fund aims to provide investors with a unique asset class within the small-cap category.

The ETF filters small-cap stocks based on parameters like liquidity, momentum, and quality (LQM).

By focusing on these factors, the fund seeks to offer a comprehensive approach to factor investing, utilising systematic rule-based approaches to achieve a desired performance profile, the fund house said.

Entry load will not be applicable.

For investors transacting directly with the asset management company (AMC), no exit load will be levied on redemptions made by market makers/large investors directly with the AMC.

For investors transacting on the exchange, exit load will also be not applicable.

Siddharth Srivastava, Head – ETF Product and Fund Manager, at Mirae Asset Mutual Fund, recommends considering investment in the Mirae Asset Nifty Smallcap 250 Momentum Quality 100 ETF.

"This multi-factor product focuses on Liquidity, Quality, and Momentum (LQM), making it the first of its kind in the small-cap segment. The ETF aims to track a robust portfolio of carefully selected 100 small-cap stocks from the Nifty Smallcap 250 Index, with the goal of potentially experiencing lower drawdowns," he said.

Given the current market valuations, Srivastava suggested that investors may opt for either a lump sum investment or consider a Systematic Investment Plan (SIP) for a long-term investment horizon.