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.
List of factor-based ETFs & index funds (smart beta) in India
| Scheme Name | AUM(Cr) June 2020 |
| DSP Equal Nifty 50 Fund | 99.9371 |
| Principal Nifty 100 Equal Weight Fund | 16.0920 |
| Sundaram Smart NIFTY 100 Eq Weight Fund | 20.9452 |
| ICICI Pru Nifty Low Vol 30 ETF | 111.0347 |
| Edelweiss ETF – Nifty 100 Quality 30 | 16.5371 |
| Kotak NV 20 ETF | 12.5074 |
| Nippon India ETF NV20 | 22.7120 |
| ICICI Pru NV20 ETF | 7.3439 |
| SBI quality 30 ETF | 19 |
| ICICI Pru – Nifty Alpha Low Volatility 30 ETF | Opens Aug 2020 |
Update: SBI quality 30 ETF has been added thanks to Ashwin Raja for pointing this out.
Description of underlying index funds
- DSP Equal Nifty 50 Fund: equal weight to Nifty 50 stocks. See: Nifty 50 Equal Weight Index vs Nifty 50: Does equal weight result in more returns?
- Principal Nifty 100 Equal Weight Fund and Sundaram Smart NIFTY 100 Eq Weight Fund: equal weight to Nifty 100 stocks. Related article: The NIFTY 100 Equal Weight Index As a Mutual Fund Benchmark
- ICICI Pru Nifty Low Vol 30 ETF 30 stocks with lowest volatility stocks from Nifty 100 over last one year. Related article: Picking Stocks With Low Volatility: A simple, but effective strategy? Stocks that have turnover less than any of Nifty 50 stocks are capped at 3%. Current weights can be seen in the latest factsheet of N100LV30
- Edelweiss ETF – Nifty 100 Quality 30: 30 stocks from NIFTY 100 and NIFTY Midcap 50 indices. Stocks with low price volatility in the last 365 days and higher profitability (ROE), lower leverage (debt to equity) and stabler earnings (EPS growth). Related article: How good are the top 10 stocks of NIFTY Quality Low-Volatility 30 Index? Weights are capped at 5% – this is a desirable feature. See the latest factsheet of N100Q30.
- Kotak NV 20 ETF, Nippon India ETF NV20, ICICI Pru NV20 ETF: Stocks with low PE (30% weight), low PB (20% weight), high div yield (10% weight) and high ROCE (40% weight) are shortlisted from the Nifty 50. The stocks with the top 20 “value rank” are chosen to be part of the index. Weights are capped at 15% (see NV 20 factsheet). This can cause concentration problems. This index is best avoided. Related article: Nifty 50 Value 20 (NV20) Index: Is this better than Nifty 50?.
- SBI quality 30 ETF This tracks the NIFTY 200 Quality 30 TRI. The criterion is the same as for the Edelweiss fund above but the stock universe is now Nifty 200.
Related articles:
- Are Nifty Smart Beta (strategic) Indices better than the Nifty Next 50?
- Low volatility stock investing: Does it work? Higher returns at lower risk?
- Momentum Stock Investing in India: Does it work?
Expense ratios of factor-based funds
| Fund | Expense Ratio(%) June 2020 |
| Edelweiss ETF – Nifty 100 Quality 30 | 0.28 |
| ICICI Pru Nifty Low Vol 30 ETF | 0.42 |
| ICICI Pru NV20 ETF | 0.15 |
| Nippon India ETF NV20 | 0.37 |
| Principal Nifty 100 Equal Weight Fund | 0.96 |
| Sundaram Smart NIFTY 100 Eq Weight Fund | 0.95 |
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 Name | 29-Jul-2019 To 29-Jul-2020 Tracking Error |
| Principal Nifty 100 Equal Weight Fund(G) | 0.33 |
| Kotak NV 20 ETF | 0.53 |
| Nippon India ETF NV20 | 0.25 |
| ICICI Pru NV20 ETF | 0.53 |
| Edelweiss ETF – Nifty 100 Quality 30 | 0.11 |
| Sundaram Smart NIFTY 100 Eq Weight Fund-Reg(G) | 0.29 |
| ICICI Pru Nifty Low Vol 30 ETF | 0.13 |
| 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!
We now publish both equity fund and debt fund (+ hybrid fund) screeners each month!
Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video! ⇐ More than 415 investors and advisors use this!
Unlock the secrets of successful financial advisors and entrepreneurs with our new course!
My new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Join our courses in exclusive Facebook Groups!
- 550+ members are now part of our new course: How to get people to pay for your skills! (watch 1st lecture for free). Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show how to achieve by showcasing your skills and building a community that trusts you and pays you!
- Goal-based portfolio management! Join 2220+ members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment of Rs. 3000 only. No recurring fees! Life-long access to videos (10+ hours content) in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author
M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] comAbout freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)Free android apps
- All calculators from our book, “You can be Rich Too” are now available on Google Play!
- Install the Financial Freedom App! (Google Play Store)
- Install Freefincal Retirement Planner App! (Google Play Store)
- Find out if you have enough to say "goodbye" to your employer (Google Play Store)