Tata Asset Management Company has announced the launch of Tata Nifty200 Alpha 30 Index Fund, an open-ended scheme replicating / tracking Nifty200 Alpha 30 Index (TRI). The fund aims to track the performance of the top 30 companies with high alpha within the Nifty200 Index. Investment objective: The investment objective of the scheme is to provide returns, before expenses, that commensurate with the performance of Nifty200 Alpha 30 Index (TRI), subject to tracking error. There is no assurance or guarantee that the investment objective of the scheme will be achieved. The scheme does not assure or guarantee any returns. "The alpha factor based passive investing strategy seeks to benefit from continued trends in the market. It adjusts to changing market conditions and increases the coverage and weightage of outperforming sectors/stocks and underweights underperforming sectors/stocks," Tata Asset Management company said in a release. Minimum Application Amount (During NFO) - Rs 5,000/- and in multiple of Re 1/- thereafter Tata Nifty200 Alpha 30 Index Fund NFO Period - August 19, 2024 to September 2, 2024 The Index's methodology measures excess return generated by the portfolio relative to its benchmark index Nifty200 after adjusting for risk and volatility. Also read: Mutual Funds: THESE 5 SIP mistakes can cost you dearly Based on the alpha factor, the fund, managed by Kapil Menon, identifies and includes stocks that generate returns above the broad market return and risk-free return, giving more importance to stocks which generate high excess returns per unit of risk. As a result, Nifty200 Alpha 30 Index has been able to outperform market cap weighted indices like Nifty200 during market upturns. However, it should be noted that Nifty200 Alpha 30 Index may underperform vis-à-vis Nifty200 during market downturns. At the launch of the index fund, Anand Vardarajan, Chief Business Officer, Tata Asset Management, said, "This strategy aims to capture extra returns over what Nifty200 index could provide by selecting the top 30 stocks which can deliver alpha. This is yet another differentiated offering from our side with a view to building our product portfolio. We believe these could add value to clients when it comes to constructing and diversifying their investment portfolio." While sector exposure will change to reflect the outperforming sectors, the index will maintain a stock cap of 5% which makes the index diversified across sectors and stocks. Also read: Mutual Fund Calculator: Starting Rs 3000 SIP at 30? Here’s how much you will get at retirement Index methodology: The Nifty200 Alpha 30 Index methodology measures excess investment return relative to the Benchmark index Nifty200 using 1 year trailing price. Top 30 stocks with highest Jensen's Alpha are chosen, allocating more weight to stocks which generate high Alpha per unit of risk, i.e., volatility. Our Tata Nifty200 Alpha 30 Index Fund replicates this index. Index is re-balanced on a quarterly basis using data ending last trading day of February, May, August, and November. The stocks should have a minimum listing history of 1 year as on the cut-off date and should be available for trading in derivative segment (F&O) as on the effective date.
