Low Volatility Indexes for Long-Term Stability
Low volatility indexes can be an attractive option for long-term investors seeking stability and potentially some outperformance compared to the broader market (like the Nifty 50). These indexes track companies with historically lower stock price fluctuations.
Choosing Between Nifty 100 Low Volatility 30 and S&P BSE Low Volatility Index
There are two main low volatility indexes in India:
- Nifty 100 Low Volatility 30 Index: This index focuses on the 30 least volatile large-cap stocks from the Nifty 100. Large-cap stocks are generally considered to be less risky than smaller companies.
- S&P BSE Low Volatility Index: This index includes 30 stocks with the lowest volatility from the BSE LargeMid 250. This broader universe incorporates both large-cap and mid-cap companies.
Which of these would be better for a long-term portfolio?
Additionally, I’m curious why many asset management companies (AMCs) haven’t launched funds based on the BSE Low Volatility Index. Currently, UTI has BSE Low Volatility Index index fund, and Motilal offers an ETF for the same, although it has very low trading volume.
for the long term, go for small caps or other aggressive options. just check the numbers; the risk is close to none (for long term only!). honestly, these media and influencers fool people in the name of sponsorship. less risky funds are better for the short term, where they can give you a little better return than an fd. for 10-15-20+ years, go for highly aggressive ones. do the math. tell me one risky fund that has not performed well in the past 10 years? and what about 10 years before that? and 10 years before that? every decade, our country grows, the index grows. moreover, over longer runs, index funds like the smallcap 250 beat any fund manager. just sit for some time and do the math.
to increase your chances, don’t do sip. since these are highly volatile, every few weeks you might get a -2 to -4% dip, buy those. a good strategy is to opt for funds that have a lower payment amount like 100 or 500, etc., so as middle-class people we can buy on these dips regularly. when the market peaks, sit back and relax, gather more units when things are bad. check the portfolio after 2 years and then tell me. note that i am not sebi registered or anyone to recommend anything. you may please do your research. btw, you mentioned long term, so my comment, else based on different goals and timeframes, other funds like you mentioned are also great, nothing held back. but any day i would avoid debt funds and such low-growth options. market mein aaye hai rokda kamao.