SBI Launches NFO Tracking Low Volatility 30 Index to Offer Stable Equity Exposure

The SBI Nifty100 Low Volatility 30 Index Fund is an open-ended index fund that aims to replicate the performance of the Nifty100 Low Volatility 30 Index. This index is composed of 30 stocks selected from the Nifty100 based on their low volatility, making it a more stable option for long-term investors. The fund adopts a passive investment approach, meaning it does not actively try to outperform the index but mirrors its composition and returns, subject to tracking error. It suits investors who are looking for a cost-effective and diversified equity portfolio with reduced volatility, especially in uncertain market conditions. The NFO is managed by SBI Mutual Fund, one of India's leading fund houses.

Key Features of SBI Nifty100 Low Volatility 30 Index Fund

• Opening Date: July 8, 2025
• Closing Date: July 22, 2025
• Exit Load: 0.25% if exited within 15 days of allotment, Nil after 15 days 
• Minimum Investment: ₹5,000 and in multiples of ₹1 thereafter

Objective of SBI Nifty100 Low Volatility 30 Index Fund

The objective of the SBI Nifty100 Low Volatility 30 Index Fund-Dir (G) is to provide returns that closely correspond to the total returns of the Nifty100 Low Volatility 30 Index, subject to tracking error. However, there is no assurance that the investment objective will be achieved.

Investment Strategy of SBI Nifty100 Low Volatility 30 Index Fund

• Follows a passive investment approach by tracking the Nifty100 Low Volatility 30 Index
• Focuses on low-volatility stocks, offering relative stability in market fluctuations
• Investments are limited to securities that are part of the underlying index.
• Permits up to 5% allocation in non-index stocks due to corporate actions
• May use derivatives for hedging and portfolio efficiency
• No active stock selection; avoids subjective economic or sectoral analysis

Risks Associated with SBI Nifty100 Low Volatility 30 Index Fund

• Market Risk: Returns are subject to stock market fluctuations, which can affect NAV
• Liquidity Risk: Trading volumes and settlement periods may delay buying/selling
• Tracking Error Risk: Returns may deviate from the benchmark due to fund expenses or the timing of investments
• Derivatives Risk: Usage of derivative instruments carries counterparty and volatility risks.
• Equity Volatility: Despite the low volatility theme, equity investments are inherently volatile
• Operational Risk: Includes delays in trade settlements or unexpected market behaviour

Risk Mitigation Strategy by SBI Nifty100 Low Volatility 30 Index Fund

• The NFO seeks to minimise risk by adhering strictly to its passive investment mandate and maintaining alignment with the Nifty100 Low Volatility 30 Index. 
• Stocks in the index are chosen based on liquidity and low volatility metrics, enhancing stability. 
• The fund avoids subjective judgment by the fund manager, thus eliminating active management risk. 
• A robust risk management framework is in place, including regular monitoring of tracking error and internal investment limits. Additionally, a board-level Risk Management Committee oversees broader strategic and operational risks. 
• The fund also uses diversification and liquidity-focused rebalancing to control potential downside.

What Type of Investor Should Invest in SBI Nifty100 Low Volatility 30 Index Fund?

• Investors seeking low-volatility equity exposure for long-term capital growth
• Those preferring a passive, rule-based investing approach over active stock-picking
• Individuals looking to balance equity risk with relative stability in turbulent markets.
• SIP investors aiming for gradual wealth accumulation through diversified low-volatility equities.
• Investors with a moderate risk profile seeking index-based returns.