Axis Mutual Fund has announced the launch of the Axis Nifty500 Low Volatility 50 Index Fund, an open-ended passive equity scheme. This new fund provides investors with a rules-based approach to gain exposure to the equity market while specifically targeting reduced portfolio volatility.
The New Fund Offer (NFO) for the Axis Nifty500 Low Volatility 50 Index Fund is scheduled to open on September 9, 2026, and will close on September 22, 2026.
Understanding the Low Volatility Strategy
Unlike traditional index funds that primarily track market capitalization, this fund employs a factor-based strategy. It aims to identify and invest in 50 stocks from the broader Nifty 500 universe that have historically demonstrated lower price fluctuations. The selection process involves:
- Applying liquidity criteria to stocks within the Nifty 500.
- Ranking eligible stocks based on a low-volatility score.
- Selecting the top 50 lowest-volatility stocks for inclusion.
The weighting of these 50 stocks within the index is determined by their low-volatility score and free-float market capitalization, subject to predefined limits. The index undergoes rebalancing twice a year, specifically in June and December, to maintain its low-volatility characteristic.
Historical Performance Insights
According to Axis Mutual Fund, the underlying Nifty500 Low Volatility 50 TRI strategy has historically combined lower volatility with competitive returns. For the 20-year period ending July 31, 2026, the Nifty500 Low Volatility 50 TRI delivered a Compound Annual Growth Rate (CAGR) of 16%, outperforming the Nifty 500 TRI's 13% CAGR. Furthermore, its annualised volatility during the same period was 15.6%, significantly lower than the Nifty 500 TRI's 19.9%.
It is crucial for investors to remember that past performance does not guarantee future returns. While a low-volatility strategy aims to mitigate risk, it can still experience losses during broader equity market downturns.
Key Details for Investors
The Axis Nifty500 Low Volatility 50 Index Fund is managed by Nandik Mallik and Rohit Gautam. Key investment details include:
- Fund Type: Open-ended index fund
- Underlying Index: Nifty500 Low Volatility 50 TRI
- Minimum Investment: ₹100, with subsequent investments in multiples of ₹1
- Exit Load: 0.25% if redeemed or switched within 15 days of allotment; nil thereafter
- Rebalancing Frequency: Twice annually (June and December)
Who Should Consider This Fund?
This fund is particularly suited for investors seeking equity market exposure through a systematic, rules-based approach, especially those who prioritize reducing the intensity of portfolio fluctuations over actively stock-picking or market timing. For investors already holding conventional Nifty 50 or Nifty 500 index funds, this new scheme offers a way to diversify by adding a distinct low-volatility factor exposure to their existing equity portfolio. It should be considered as a complementary allocation, aligning with an investor’s individual risk profile, investment horizon, and current holdings.
The fund's primary objective is not to eliminate all equity market risk or guarantee outperformance in every market cycle, but rather to provide market exposure via a portfolio engineered around the characteristic of historical low volatility.