India Smart Beta & Factor ETFs

Smart Beta ETFs are rules-based funds that weight stocks using factors like momentum, value, quality, or low volatility, rather than simple market-cap weighting, aiming to generate higher risk-adjusted returns.

Factor investing involves selecting stocks based on specific characteristics or factors, such as momentum, quality, value, size, or growth, which historically have delivered alpha in Indian markets.

MOM50 (Motilal Oswal Nifty 200 Momentum 30 ETF) selects 30 stocks from the Nifty 200 with the strongest price momentum, targeting sectors like defence, power, and consumer goods.

NETFIT (Motilal Oswal Nifty Midcap 150 ETF) provides systematic exposure to Indian mid-cap companies ranked 101-250 by market capitalization, aiming for long-term growth.

JUNIORBEES (Nippon India ETF Junior BeES) tracks the Nifty Next 50 Index, representing India’s future large-cap stocks ranked 51-100 by market cap.

Momentum ETFs capture stocks with strong price trends, often outperforming during structural growth periods. In India, MOM50 has delivered over 28% one-year returns recently.

Indian mid-caps historically outperform large-caps over long periods. NETFIT provides diversified exposure to promising mid-cap companies, offering higher growth potential.

MOM50 has recently captured strong momentum in defence, power, and consumer sectors, reflecting structural growth trends in India.

MOM50 has an expense ratio of 0.22%.

NETFIT also has an expense ratio of 0.22%.

MOM50 offers a small yield of approximately 0.3%, as momentum stocks generally reinvest earnings for growth.

NETFIT has a modest yield of 0.5%, reflecting reinvestment in mid-cap growth companies.

Yes, they are suitable for long-term investing as they systematically capture factors like momentum and growth that can outperform over multi-year periods.

They can outperform over time by exploiting specific factors, though results vary by market conditions and factor cycles.

Risks include factor underperformance during certain market conditions, higher volatility (especially mid-cap exposure), and sector concentration.

JUNIORBEES tracks the Nifty Next 50, offering exposure to future large-cap stocks, whereas MOM50 targets momentum stocks and NETFIT targets mid-cap growth stocks.

NETFIT is ideal for mid-cap growth exposure, MOM50 for momentum-driven gains, and JUNIORBEES for the next wave of future blue-chip companies.

Some Indian ETFs are available on international platforms through mutual fund or ETF wrappers, but domestic NSE brokers typically offer full access.

MOM50 and NETFIT typically rebalance quarterly or semi-annually to ensure the ETF holds the stocks that best match their factor rules.

Factor ETFs can comprise 5-20% of a diversified equity portfolio, depending on risk tolerance, as they offer growth potential but can be more volatile than market-cap weighted ETFs.

MOM50 has delivered around 28.5% one-year returns recently, benefiting from strong momentum in key Indian sectors.

NETFIT has assets under management of approximately ₹1,800 crore, reflecting investor interest in mid-cap growth exposure.

Indian ETFs held in brokerage accounts are subject to capital gains taxes. Long-term capital gains above ₹1 lakh are taxed at 10%, while dividends are taxed as per applicable slabs.