Axis Max Life Nifty 500 Multifactor 50 Index Fund: A Multifactor Investment Approach

Global markets continue to experience periods of heightened volatility and uncertainty. This is due to a range of economic and geopolitical factors and investors are looking for new ways to navigate their investments. This unpredictability likely to persist for the foreseeable future. So, relying on a single factor to guide investment decisions may not be the most effective strategy for achieving long-term financial goals.

To address the risks associated with relying on a single factor, Axis Max Life Insurance is introducing the Axis Max Life Nifty 500 Multifactor 50 Fund. This is a passively managed multifactor equity fund that is designed to build a diversified stocks portfolio. New and existing policyholders can invest in the fund through various Axis Max Life ULIPs.

Let’s examine how this index fund works and whether it might be suitable investment for you.

What is the Axis Max Life Nifty 500 Multifactor 50 Index Fund?

The Axis Max Life Nifty 500 Multifactor 50 Index Fund is a multi-factor passively managed equity fund that mirrors the Nifty 500 Multifactor MQVLv 50 Index. The fund will invest in a basket of 50 stocks drawn from the Nifty 500 Index universe selected based on 4 key factors – momentum, quality, value and low volatility.

The stock-picking methodology used by the scheme is transparent and follows the methodology prescribed by the National Stock Exchange (NSE) which manages the underlying index.

The new fund does not currently have its own historical returns.. However, the underlying Index that the fund mirrors has shown outperformance compared tothe broader Nifty 500 Index over various time periods.

The table below compares the returns of the Nifty 500 Multifactor MQVLv 50 Index versus the Nifty 500 Index over various time periods as of April 24, 2025:

As shown above, back-tested data indicates that the Nifty 500 Multifactor MQVLv 50 Index has outperformed the Nifty 500 Index over various time periods. While this outperformance is not guaranteed in the future, it suggests the potential of this multifactor index to perform favorably compared to the broader index across different market conditions.

What is the Nifty 500 Multifactor MQVLv 50 Index?

The Nifty 500 Multifactor MQVLv 50 Index is a multi-factor index comprising a basket of 50 stocks selected from the Nifty 500 stock universe. This multifactor index incorporates 4 different factor scores – momentum, quality, value and low volatility – into its stock selection methodology. The potential benefits of stock selection based on each of these factors is mentioned below:

Momentum: Stocks with high momentum scores have shown outperformance in the recent past and may offer investors growth opportunities.

Quality: Stocks with high quality scores may indicate strong fundamentals and can be better positioned to withstand market downturns. High quality stocks can thus help in providing significant downside protection during market drawdowns.

Value: Stocks that are priced lower than their intrinsic value have the potential to offer long-term growth opportunities. Stocks that have high value scores are typically available at a low valuation but may experience price increases as the market price aligns with the stock's intrinsic value.

Low Volatility: Equity investments are prone to volatility due to market movements, especially in the short-term. However low volatility stocks tend to witness smaller price fluctuations. The inclusion of low volatility stocks can thus help reduce the overall volatility risk of the investor’s portfolio.

Nifty 500 Multifactor MQVLv 50 Index uses a composite score based on all of the above factors to select its stocks. Therefore, the overall portfolio of the index is designed to potentially optimise returns during market uptrends while mitigating losses during market downturns. So, an index fund like the Axis Max Life Nifty 500 Multifactor 50 Index Fund which mirrors this index could provide investors with similar benefits aimed at balancing returns and investment risk.

What will the Axis Max Life Nifty 500 Multifactor 50 Index Fund Invest in?

Since the Axis Max Life Nifty 500 Multifactor 50 Index Fund mirrors the Nifty 500 Multifactor MQVLv 50 Index, the 50 stocks included in the index will also be included in the fund portfolio with their respective weights. Below is a list of top 5 stocks featured in the index and their individual weights on the index as of April 24, 2025:

The presence of a diversified basket of stocks across different market capitalisation categories, as shown above, reduces the potential concentration risk for the investor. This can contribute to an investment portfolio that may be less affected by the performance of any single stock.

To understand the potential sectoral diversification offered by the Axis Max Life Nifty 500 Multifactor 50 Index Fund, it's helpful to examine the top 5 sectors that featured in the index as of April 24, 2025:

As shown above, the financial services sector had the highest weight in the index followed by oil & gas and FMCG sectors. While the top 3 sectors represent over 50% of the index weight, the index fund will also have exposure to a number of other sectors. This aims to ensure that the fund's returns are not disproportionately influenced by the performance of any single sector.

Reasons to Consider Investing in the Axis Max Life Nifty 500 Multifactor 50 Index Fund

Implementing a multi-factor strategy for stock selection has the potential to offer returns than a single-factor strategy. However, it’s important to remember that the Axis Max Life Nifty 500 Multifactor 50 Index Fund is an equity fund and involves risks associated with equity investments.

• This multi-factor index fund may align with your investment needs if:
• You intend to invest for the long term (i.e., 5 years or more) to pursue long-term financial goals
• You want to diversify your portfolio by including factor-based investments
• You have a high degree of risk tolerance and are prepared for short-term volatility to potentially achieve long-term returns.
• You seek to reduce the impact of fund manager bias through passive fund management
• You prefer a focused investment approach aimed at selecting a smaller basket of stocks with the potential to outperform the broader index over the long-term

This list is illustrative, and other situations may also lead you to consider this investment option.

How to Invest in the Axis Max Life Nifty 500 Multifactor 50 Index Fund

The Axis Max Life Nifty 500 Multifactor 50 Index Fund will be available to Axis Max Life policyholders through various ULIP offerings from the company. These products include life insurance benefits providing policyholders with both life insurance and investment options. Some of the Axis Max Life ULIP plans that will offer access to this passive index fund include:

• Axis Max Life Online Savings Plan (OSP)
• Axis Max Life Flexi Wealth Advantage Plan (FWAP)
• Axis Max Life Smart Term with Additional Returns (STAR) ULIP and others

This list is illustrative, and other Axis Max Life ULIP solutions may also provide current and new policyholders access to this multi-factor fund.

Snapshot of the Axis Max Life Nifty 500 Multifactor 50 Index Fund

Benchmark Index: Nifty 500 Multifactor MQVLv 50 Index

Stock Universe: Nifty 500 Index

Risk Profile: Very High

Asset Allocation of Fund:

Investment Objective: To invest in stocks from NSE’s Nifty 500 Multifactor MQVLv 50 Index based on momentum, quality, value and low volatility factors. The fund aims to invest in companies with weights similar to the index and generate returns that closely align with the index, subject to tracking error.

• NFO Period @ Rs. 10 per unit from May 20, 2025 to June 3, 2025

Additional Options to Diversify Your Portfolio with Axis Max Life Index Funds

Axis Max Life Insurance currently offers other factor-based index funds through ULIP offerings. Some of the popular ones include:

Nifty Momentum Quality 50 Fund

The Axis Max Life Nifty Momentum Quality 50 Fund is a passively managed fund that mirrors the portfolio and performance of the Nifty 500 Multicap Momentum Quality 50 Index. This multicap fund invests in stocks from the Nifty 500 Index selected by momentum and quality scores.

Midcap Momentum Index Fund

The Axis Max Life Midcap Momentum Index Fund tracks the Nifty Midcap 150 Momentum 50 Index i to replicate its performance within tracking error margins. This fund primarily invests in mid-capitalisation stocks that have the potential for long-term returns. Stock selection is based on the momentum scores of midcap stocks in the Nifty Midcap 150 Index.

Nifty Smallcap Quality Index Fund

The Axis Max Life Nifty Smallcap Quality Index Fund is a passively managed scheme that mirrors the Nifty Smallcap 250 Quality 50 Index. The fund’s portfolio includes small cap stocks from the Nifty Smallcap 250 Index chosen by their quality scores. This fund aims to invest in quality small cap stocks that may offer investors access to emerging sectors not readily available through other investment options.

Note to the Reader: This article has been produced on behalf of the brand by HT Brand Studio and does not have journalistic/editorial involvement of Mint.