Groww Launches Low Volatility ETF: A New Gateway to Steady Growth!

The NFO is an open-ended Exchange Traded Fund (ETF) launched by Groww Mutual Fund. It aims to replicate the performance of the Nifty 500 Low Volatility 50 Index by investing in its constituents in the same proportion. The index comprises 50 stocks from the Nifty 500 universe with the lowest volatility. This NFO offers investors an opportunity to gain exposure to a diversified portfolio of relatively stable stocks, making it suitable for those seeking to mitigate risk while aiming for long-term capital appreciation. The fund is passively managed, and its performance closely tracks the underlying index, subject to tracking error.

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Key Features of Groww Nifty 500 Low Volatility 50 ETF

• Opening Date: 28 May 2025
• Closing Date: 11 June 2025
• Exit Load: Nil
• Minimum Investment Amount: ₹500 and in multiples of ₹1 thereafter

Objective of Groww Nifty 500 Low Volatility 50 ETF

The primary objective of the NFO is to generate long-term capital growth by investing in securities forming part of the Nifty 500 Low Volatility 50 Index. The goal is to deliver returns before expenses that closely mirror the index, although the Groww Nifty 500 Low Volatility 50 ETF does not guarantee that the objective will be achieved.

Investment Strategy of Groww Nifty 500 Low Volatility 50 ETF

• The fund follows a passive investment strategy replicating the Nifty 500 Low Volatility 50 Index.
• Investments are made in the same proportion/weightage as the index components.
• Portfolio rebalancing is done regularly to minimise tracking error.
• A portion of assets may be allocated to debt and money market instruments for liquidity needs.
• The Groww Nifty 500 Low Volatility 50 ETF may invest in other mutual fund schemes, subject to SEBI regulations.

Risks Associated with Groww Nifty 500 Low Volatility 50 ETF

• Market Risk: NAV may fluctuate due to movements in stock prices and economic or political events.
• Liquidity Risk: Trading may be halted on exchanges due to market volatility or regulatory action.
• Tracking Error: Deviations from index returns can occur despite best efforts.
• Regulatory Risk: Changes in SEBI or exchange regulations may impact fund operations.
• ETF-Specific Risk: Units may trade at a premium/discount to NAV and may lack liquidity in the secondary market.

Risk Mitigation Strategy by Groww Nifty 500 Low Volatility 50 ETF

The Groww Nifty 500 Low Volatility 50 ETF seeks to mitigate risks primarily by maintaining a passive investment style, focusing on low-volatility stocks to reduce sudden price fluctuations. The fund’s exposure to a diversified set of 50 low-volatility stocks from the Nifty 500 aims to ensure a more stable return profile. Regular rebalancing of the portfolio helps keep the tracking error low. Liquidity is ensured by holding a portion of assets in debt and money market instruments. Furthermore, the transparent methodology of the index selection provides clarity and consistency in asset allocation. However, risks cannot be fully eliminated and may impact returns during adverse market conditions.

What Type of Investor Should Invest in Groww Nifty 500 Low Volatility 50 ETF?

• Investors looking for exposure to diversified, low-volatility equity.
• Those with a long-term investment horizon are aiming for stable capital appreciation.
• Passive investors who prefer index-based strategies over active fund management.
• Individuals seeking an ETF that closely mirrors a benchmark with relatively reduced risk.
• Investors are comfortable with equity market fluctuations but prefer less volatile options.