Bajaj Allianz Life has introduced Bajaj Allianz Life Nifty Alpha 50 Index Fund, which will be available to customers who currently own or plan to buy it. Unit-Linked Insurance Products (ULIP)For those who don't know, it is a market-linked index fund designed to replicate the performance of the Nifty Alpha 50 Index. This index comprises of 50 large-cap stocks Known for high alpha (potential for excess returns) and low volatility.
Investors can leverage this new fund to capitalise on the growth potential of high-alpha stocks, diversify their portfolio and benefit from an index-based investment strategy, as well as obtain life insurance. The fund operates on a passive management strategy where the fund manager aims to mirror the Nifty Alpha 50 Index by investing in its constituent 50 stocks in proportion to their respective weightings within the index. Net Asset Value (NAV) The value of the fund during the New Fund Offer (NFO) period (July 01-15, 2024) is as follows 10.
Commenting on the launch, Sampath Reddy, Chief Investment Officer, Bajaj Allianz Life Insurancesaid, “India's economic growth story remains strong, which presents multiple opportunities for investors. As investors seek to benefit from this growth journey, they realise the importance of diversifying their portfolio across different market cap segments. Bajaj Allianz Life Nifty Alpha 50 Index Fund is designed to achieve high alpha returns by investing in top performing stocks across different market segments. Historical study of the last four years shows that the Nifty Alpha 50 Index has been mid-cap and small-cap oriented, as most of the alpha has come from companies in these segments. Over the medium to long term, the Nifty Alpha 50 Index has delivered significantly better returns than the broader market.”
The Nifty Alpha 50 index focuses on companies that exhibit high alpha scores. It identifies the top 50 large-cap stocks with the highest Jensen alpha over the past year, which are poised for potential excess returns. For those who don't know, Jensen alpha (α) determines the performance of a stock relative to the performance anticipated by the Capital Asset Pricing Model (CAPM) based on its beta (volatility). A positive alpha indicates that the stock has exceeded expectations, while a negative alpha indicates that it has fallen short. Hence, Nifty Alpha 50 uses Jensen alpha as a methodology to identify high-performing stocks and construct an index that monitors their combined performance.
Nifty Alpha 50 Index Has consistently outperformed the broader market indices over the medium to long term. It specifically targets the top 50 companies based on their alpha values. Bajaj Allianz Life Nifty Alpha 50 Index Fund offers significant returns by investing in a diversified portfolio of stocks spread across various sectors.
