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The NSE’s index services subsidiary, India Index Services & Products, on Wednesday launched a quality-factor-based smart-beta index named, Nifty200 Quality 30.
The Nifty200 Quality 30 index includes the top 30 companies from its parent Nifty 200 index. The selection is based on ‘quality’ scores.
The quality score for each company is determined based on return on equity (ROE), financial leverage (debt-to-equity ratio) and earning (EPS) growth variability analysed during the previous five years. The weight of each stock in the index is based on a combination of the stock’s quality score and its free float market capitalisation, said an NSE release.
The base date for the index is April 1, 2005, and base value is 1,000. The index composition is reconstituted on a semi-annual basis.
End-of-day calculation
The Nifty200 Quality 30 index will be calculated on end-of-day basis.
Globally, popularity of smart beta indices is picking up with assets under management of ETFs and ETPs tracking such indices steadily increasing at a rate of over 30 per cent a year during the past five years to reach nearly $650 billion as on December 31, 2017.
“In India, with availability of various smart beta indices, ETFs based on them are also expected to pick up. The launch of Nifty200 Quality 30, along with the existing suite of Nifty smart beta indices reinforces NSE’s commitment towards developing the passive fund management space,” said Mukesh Agarwal, CEO — IISL, in the release.
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