Loaded on blue chips and low on volatility | Economic Times

High-net-worth investors eyeing a low-cost, smart beta product for their large-cap equity portfolio can consider the ICICI Prudential Nifty Low Vol 30 FoF. Retail investors could stay away and go for simple passive products linked to Nifty 50 or Nifty Next 50, or opt for actively-managed, diversified equity mutual funds.ICICI Prudential Nifty Low Vol 30 FoF is an open-ended fund of funds that will invest in ICICI Prudential Nifty Low Vol 30 ETF, which in turn replicates Nifty 100 Low Volatility 30 Index that provides exposure to a portfolio of 30 least volatile stocks in the Nifty 100. The new fund offer is open and closes on April 6. It aims to limit the impact of market volatility and gain exposure to the least volatile blue-chip firms.The weights of stocks in the Nifty 100 Low Volatility 30 Index are based on volatility with individual stock weight capped at 3%. The index is rebalanced on a quarterly basis.“HNIs looking for stable large-cap portfolios offering better risk-adjusted returns could consider an allocation to this space,” says Vijay Kuppa, founder, Orowealth. Vijay believes such a portfolio will carry the lowest risk in the equity large-cap space. Rule-based smart beta strategies remove fund manager bias and come with a low cost.However, financial planners point out that low volatility could impact returns. “This makes sense for investors who are keen to avoid volatility and understand for that they may have to give up some upside,” says S Shankar, CFP, Credo Capital.Financial planners believe retail investors should keep it simple and stick to plain vanilla diversified equity MFs only or passive index funds.