NFO Alert: Aditya Birla Sun Life Mutual Fund launches twin factor-based index funds

Aditya Birla Sun Life Mutual Fund has announced the launch of two new factor-based index funds: the Aditya Birla Sun Life BSE 500 Momentum 50 Index Fund and the Aditya Birla Sun Life BSE 500 Quality 50 Index Fund.

The New Fund Offers (NFOs) for both schemes are currently open for subscription and will close on August 4.

These launches mark a strategic extension of the asset manager’s passive investment offerings, providing retail investors with access to differentiated equity strategies anchored in quantitative and rule-based index construction, according to a press release by the fund house.

The funds will be managed by Priya Sridhar. The minimum amount for lumpsum investment in both the funds is Rs 500 and in multiples of Rs 100 thereafter during NFO period. For monthly and weekly SIP, the minimum amount is Rs 500 and in multiples of Re 1 thereafter in both the funds.

Also Read | SBI FDs offer up to 6% returns in short term. Should investors explore debt mutual funds instead?

Aditya Birla Sun Life BSE 500 Momentum 50 Index Fund

The BSE 500 Momentum 50 Index Fund aims to capture the market’s upward momentum by investing in 50 high-performing stocks from the BSE 500 universe, dynamically adjusted each quarter and is designed for investors with higher risk appetite looking to maximize upside capture in trending markets.

The investment objective of the Scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the BSE 500 Momentum 50 Total Return Index, subject to tracking errors.

The performance of the fund will be benchmarked against the BSE 500 Momentum 50 Total Return Index. The fund will allocate 95-100% in equity and equity related instruments constituting the BSE 500 Momentum 50 Index and 0-5% in debt and money market instruments (including Cash and Cash Equivalent).

Aditya Birla Sun Life BSE 500 Quality 50 Index Fund

In contrast, the BSE 500 Quality 50 Index Fund focuses on financially sound and stable companies with high return on equity, low financial leverage, and low accruals ratio and it is tailored for investors seeking long-term wealth creation through investments in high quality names with stable balance sheets and lower volatility in earnings.

The investment objective of the scheme is to provide returns that, before expenses, closely correspond to the total returns of the securities as represented by the BSE 500 Quality 50 Total Return Index, subject to tracking errors.

The performance of the fund will be benchmarked against the BSE 500 Quality 50 Total Return Index. The fund will allocate 95-100% in equity and equity related instruments constituting the BSE 500 Quality 50 Index and 0-5% in debt and money market instruments (including Cash and Cash Equivalent).

Also Read | Madhu Lunawat makes history as first Indian woman to set up a mutual fund business

“These twin fund launches are aimed at enabling investors to diversify their core equity portfolios with factor-based strategies that have proven performance across market cycles. While the Momentum Index offers exposure to higher-return opportunities in fast-growing segments of the market, the Quality Index focusses on stocks with resilient earnings and a layer of stability against drawdowns,” said A. Balasubramanian, Managing Director and CEO, Aditya Birla Sun Life AMC.

“With India poised for sustained economic growth, both strategies offer a timely and complementary approach to long-term investing. Investors may choose either fund or a combination of both funds based on their investment horizon, risk tolerance, and return expectations,” he added.

The Quality Index typically maintains an equitable ~50% allocation to large-cap stocks with the remainder in mid- and small-caps. The Momentum Index is more agile with a quicker shift in cap structure having a combined ~70% exposure to mid- and smallcap as of June rebalance.