NSE strategy indices are a set of indices designed based on quantitative models and specific investment strategies (also known as factor-based investing) to provide a single value for the aggregate performance of a number of companies. They offer investors exposure to different investment factors like alpha, quality, value, momentum, and low volatility.

Topics of Discussion

Key Features and Types of Strategy Indices

Quantitative Basis: The indices use predefined rules and mathematical models for stock selection and weighting, rather than discretionary choices.
Factor Exposure: They are built around specific investment factors or a combination of factors.
Diversification: They typically track a diversified portfolio of stocks from a parent index (like the Nifty 50 or Nifty 500).
Investable Products: These indices serve as benchmarks for various investment products such as Exchange Traded Funds (ETFs) and index funds, allowing investors to gain exposure to these strategies.

Examples of NSE Strategy Indices

The major types of strategy indices offered by NSE include:

These indices are categorized into:

Index Category	Examples
Single Factor	Indices focusing on one factor, such as Alpha, Low Volatility, Quality, Value, Momentum, High Beta, or Dividend Opportunities.
Multi-Factor	Indices combining multiple factors like Alpha, Quality, Value, and Low Volatility.
Alternative Weighting	Indices that use weighting methods other than market capitalization, such as Equal Weight.
Leveraged/Inverse	Indices designed to provide leveraged or inverse exposure to a parent index, such as the Nifty50.

Index Methodology in Brief

The selection and weighting methodologies for these indices are based on the specific strategy:

Alpha/Momentum: Stocks are chosen based on measures of excess return relative to the market or recent price performance.
Quality: Selection is based on metrics like Return on Equity, financial leverage, and earning variability.
Value: Stocks are selected based on ratios like Price-to-Earning, Price-to-Book, and Dividend Yield.
Low Volatility: The indices aim to include the least volatile stocks from a parent index.
Equal Weight: All constituent stocks are assigned the same weight.

What Are Etfs

An Exchange-Traded Fund (ETF) is a diversified investment fund that holds a collection of assets like stocks, bonds, or commodities and trades on a stock exchange throughout the day, similar to a regular stock.

Advantages of trading etfs

Diversification: A single ETF share gives you exposure to a basket of securities, instantly diversifying your investment portfolio. This reduces risk compared to investing in individual stocks.
Asset variety: ETFs can track a wide range of assets, including market indexes (like the S&P 500), specific sectors (e.g., technology or energy), commodities (like gold or oil), and even currencies.
Cost-effective: Most ETFs, especially passively managed ones that track an index, have lower expense ratios compared to actively managed mutual funds.
Intraday trading: Unlike mutual funds, which are priced at the end of the trading day, ETF prices fluctuate throughout the day and can be bought or sold at any time during market hours.
Tax efficiency: ETFs are generally more tax-efficient than mutual funds because most trading happens on the exchange and the fund sponsor doesn’t need to redeem shares from investors, which can trigger capital gains.

How to trade ETFs

Open a brokerage account: To trade ETFs, you must have a brokerage account with a registered broker. Many online brokers offer commission-free trading for ETFs.
Fund your account: Transfer money into your brokerage account to begin trading.
Research ETFs: Research different ETFs based on your investment goals, risk tolerance, and investment horizon. Use an ETF screening tool to filter options by criteria like expense ratio, trading volume, and underlying assets.
Place an order: Log into your brokerage platform and place a buy order for the desired ETF, just as you would for a regular stock.
Monitor and manage: Track the performance of your ETF through your broker’s platform and manage your position according to your investment strategy.

Etfs Tracking for Strategy Indices

You can find Exchange-Traded Funds (ETFs) for several other popular strategy indices, including those based on momentum, low volatility, quality, value, and equal weight. Etfs Tracking strategy indices like Nifty Alpha 50 and Nifty Midcap 150 Momentum 50 indices are available in India.

Here is a list of strategy indices available as ETFs in India, along with some of the Asset Management Companies (AMCs) that offer them:

Single-Factor Indices

Nifty Alpha 50: This index has ETFs offered by asset managers like Bandhan Mutual Fund.
Nifty Alpha Low-Volatility 30: ETFs for this multi-factor index are offered by several fund houses, including ICICI Prudential, Edelweiss, Nippon India, and UTI Mutual Fund.
Nifty500 Momentum 50: ETFs that track this index are available from Motilal Oswal Mutual Fund and Bandhan Mutual Fund.
Nifty Midcap 150 Momentum 50: ETFs for this midcap-focused momentum index are gaining traction.
Nifty Midcap 150 Quality 50: ETFs tracking this index are offered by DSP Mutual Fund.

Multi-Factor Indices

Nifty Alpha Low-Volatility 30: As noted above, multiple AMCs offer ETFs for this index combining alpha and low volatility strategies.

Other Strategy and Thematic Indices with ETFs

Nifty Equal Weight indices: These are also tracked by several ETFs.
Nifty CPSE Index: Several ETFs track this index, including one from Nippon India Mutual Fund.
Nifty PSU Bank Index: This index is tracked by ETFs from Nippon India Mutual Fund.
Nifty Midcap 100: Motilal Oswal offers an ETF for this index.

How to find a specific ETF

You can find the most up-to-date list of ETFs tracking these and other indices by checking the websites of fund houses like Nippon India MF, Motilal Oswal MF, Bandhan Mutual Fund, and ICICI Prudential Mutual Fund, or on the National Stock Exchange (NSE) website.