BSE Launches Four Midcap Factor Indices to Expand Investor Toolkit
Overview
BSE Index Services has introduced four new factor indices based on the BSE 150 Midcap Index. These indices—Enhanced Value 30, Momentum 30, Low Volatility 30, and Quality 30—target 30 companies each from the mid-cap universe, selected by specific investment factors. Designed for passive fund managers, they offer new avenues for investment strategies and benchmarks.
BSE Introduces New Midcap Factor Indices
BSE Index Services announced Monday the launch of four new factor indices derived from the BSE 150 Midcap Index. This expansion aims to bolster investment products available for passive fund managers and institutional investors operating within the Indian market.
Factor-Based Strategies Unveiled
The new indices include BSE Midcap 150 Enhanced Value 30, Momentum 30, Low Volatility 30, and Quality 30. Each index meticulously tracks 30 companies selected from the BSE 150 Midcap universe based on distinct investment factors. These strategies are designed to capture specific market dynamics beyond simple market capitalization.
Investment Product Enhancement
Each index imposes a 5% stock-level capping and is scheduled for quarterly reconstitution. They have been backdated to June 20, 2005, with a base value of 1,000 and require 100% stock trading frequency. Ashutosh Singh, MD and CEO of BSE Index Services, stated that mid-caps are vital for long-term portfolios. This launch extends BSE's factor index coverage across large caps, large-mid caps, the broad market 500, and now mid-caps, facilitating diverse risk-return objectives.
Applications for Fund Managers
These indices are engineered for passive investment vehicles such as exchange-traded funds (ETFs) and index funds. They will also serve as benchmarks for portfolio management services, mutual fund schemes, and other fund portfolios, offering greater strategic flexibility.
