List of factor-based ETFs & index funds (smart beta) in India

Published: July 30, 2020 at 11:32 am

Last Updated on August 1, 2020

This is a list of factor-based ETFs and index funds, also known as smart beta funds or strategic funds, available in India as of July 2020

What is a factor-based index? An index created by active stock selection using conditions such as low volatility, momentum, alpha, quality, value etc. and not market capitalization is called a factor index. Stocks in the index are weighted using these factors – for eg. lower volatility stock has a higher weight. So this combines active stock-picking – quantitative, rule-based -with passive investing (if an ETF or index fund follows this index)

To some extent, this eliminates the problems of concentration risk associated with market-capitalization-weighted indices: Do index fund returns depend upon just a few stocks (Concentration risk)? However please note that the initial eligible stock universe would be market capitalization based (not the weights, but the list of stocks). Also, concentration risk depends on the stock weight capping rule for each index (see examples below)

Note: This listing is provided only for information purposes and is not intended as a review or recommendation. The AUM of these funds are quite low and many of them are ETFs with low trading volumes. Therefore it is recommended not to invest in these at least for the time being.

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    List of factor-based ETFs & index funds (smart beta) in India



    Scheme NameAUM(Cr) June 2020
    DSP Equal Nifty 50 Fund99.9371
    Principal Nifty 100 Equal Weight Fund16.0920
    Sundaram Smart NIFTY 100 Eq Weight Fund20.9452
    ICICI Pru Nifty Low Vol 30 ETF111.0347
    Edelweiss ETF – Nifty 100 Quality 3016.5371
    Kotak NV 20 ETF12.5074
    Nippon India ETF NV2022.7120
    ICICI Pru NV20 ETF7.3439
    SBI quality 30 ETF19
    ICICI Pru – Nifty Alpha Low Volatility 30 ETFOpens Aug 2020

    Update: SBI quality 30 ETF has been added thanks to Ashwin Raja for pointing this out.

    Description of underlying index funds

    Related articles:

    Expense ratios of factor-based funds

    FundExpense Ratio(%) June 2020
    Edelweiss ETF – Nifty 100 Quality 300.28
    ICICI Pru Nifty Low Vol 30 ETF0.42
    ICICI Pru NV20 ETF0.15
    Nippon India ETF NV200.37
    Principal Nifty 100 Equal Weight Fund0.96
    Sundaram Smart NIFTY 100 Eq Weight Fund0.95

    Last one-year tracking error of factor-based funds

    Please note, tracking error of ETFs are with respect to NAV (industry standard). This is of no use to the investor. Tracking errors should be determined with respect to the price.

    Scheme Name29-Jul-2019 To 29-Jul-2020 Tracking Error
    Principal Nifty 100 Equal Weight Fund(G)0.33
    Kotak NV 20 ETF0.53
    Nippon India ETF NV200.25
    ICICI Pru NV20 ETF0.53
    Edelweiss ETF – Nifty 100 Quality 300.11
    Sundaram Smart NIFTY 100 Eq Weight Fund-Reg(G)0.29
    ICICI Pru Nifty Low Vol 30 ETF0.13
    DSP Equal Nifty 50 Fund-Reg(G)0.40

    Summary:  factor-based funds are yet to catch on India because of AMC greed. They prefer to launch active “quant funds” based on AI and other assorted mumbo-jumbo instead of launching passive index funds. ETFs have no commissions and will not be marketed as much and suffer from liquidity risks. A multi-factor index fund should be interesting to track. Read more: How new stock investors can quickly start investing using NIFTY Multi-Factor Indices

    A new seminar is available: How to construct a long-term investment portfolio – a guide for beginners. You can sign up via this form. This is meant for absolute newbies to start investing in the right way, asking the right questions and not make the mistake of choosing products in the very first step and repent later!

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