Small-cap schemes are on fire lately.
But imagine a passive scheme beating 80% of active funds over the last decade.
Enter @MiraeAsset_IN's latest fund – Nifty Smallcap 250 Momentum Quality 100.
This index outperforms most other indices. (See image)
Should you invest? A 🧵
But imagine a passive scheme beating 80% of active funds over the last decade.
Enter @MiraeAsset_IN's latest fund – Nifty Smallcap 250 Momentum Quality 100.
This index outperforms most other indices. (See image)
Should you invest? A 🧵
Let’s start with the fund’s unique build.
This scheme picks 100 stocks from the NIFTY Smallcap 250 universe.
How does it select these companies?
First, it eliminates illiquid stocks by checking multiple parameters:
Turnover ratio, daily trading volume, etc.
This scheme picks 100 stocks from the NIFTY Smallcap 250 universe.
How does it select these companies?
First, it eliminates illiquid stocks by checking multiple parameters:
Turnover ratio, daily trading volume, etc.
After removing illiquid stocks, NSE scores the remaining firms on 2 factors:
1. Momentum: To identify stocks with recent strong performance
2. Quality: For higher profitability and stability. Also, lower leverage.
The combined score decides a stock’s weight in the index.
1. Momentum: To identify stocks with recent strong performance
2. Quality: For higher profitability and stability. Also, lower leverage.
The combined score decides a stock’s weight in the index.
Let’s get into performance now.
The index was launched in December last year.
So, the only way to gauge its success is to check back-tested data.
Mirae Asset’s presentation highlights 2 reasons that would grab anyone’s attention to this index.
What are they? 👇
The index was launched in December last year.
So, the only way to gauge its success is to check back-tested data.
Mirae Asset’s presentation highlights 2 reasons that would grab anyone’s attention to this index.
What are they? 👇
Reason 1: Huge outperformance against its parent index (NIFTY Smallcap 250)
It has outperformed the Nifty Smallcap 250 Index in 16 out of 18 calendar years since 2006.
Reason 2: The index has beaten most actively managed small-cap funds (See image)
It has outperformed the Nifty Smallcap 250 Index in 16 out of 18 calendar years since 2006.
Reason 2: The index has beaten most actively managed small-cap funds (See image)
The smart beta index has also shown the potential to fall less.
In the last 18 years, it fell more than the Nifty Smallcap 250 Index ONLY 3 times.
So, it offered superior downside protection in 15 out of 18 years - a sign of the quality factor in play.
In the last 18 years, it fell more than the Nifty Smallcap 250 Index ONLY 3 times.
So, it offered superior downside protection in 15 out of 18 years - a sign of the quality factor in play.
These numbers look good but remember one thing.
Small caps have given mind-blowing returns lately.
So, the Nifty Smallcap 250 Index is trading at a 20% premium to its long-term average.
Investing at these valuations may require longer horizons, such as 10-15 years.
Small caps have given mind-blowing returns lately.
So, the Nifty Smallcap 250 Index is trading at a 20% premium to its long-term average.
Investing at these valuations may require longer horizons, such as 10-15 years.
How does this fit into your portfolio?
Usually, it's best to steer clear of NFOs unless they offer something truly unique.
If you think this scheme offers a unique opportunity, you can start with a small SIP and evaluate it after a while.
Usually, it's best to steer clear of NFOs unless they offer something truly unique.
If you think this scheme offers a unique opportunity, you can start with a small SIP and evaluate it after a while.
Loading suggestions...