{"id":320,"date":"2018-11-25T19:58:06","date_gmt":"2018-11-25T14:28:06","guid":{"rendered":"https:\/\/srinivesh.in\/blog\/?p=320"},"modified":"2018-12-03T21:46:11","modified_gmt":"2018-12-03T16:16:11","slug":"sbi-etf-quality-a-nfo-that-you-can-consider","status":"publish","type":"post","link":"https:\/\/srinivesh.in\/blog\/sbi-etf-quality-a-nfo-that-you-can-consider\/","title":{"rendered":"SBI ETF – Quality: A NFO that you can consider"},"content":{"rendered":"

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SBI Mutual Fund has announced the launch of its Exchange Traded Fund based on one of the NSE Strategic Indices.\u00a0 SBI ETF – Quality would track the NSE 2011 Quality 30 index. The NFO is open between Nov 26 and Nov 30, 2018. In this short article, we look at the unique features of this index and ask if an investor should consider the ETF.<\/span><\/p>\n

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What is an Exchange Traded Fund?<\/span><\/h2>\n

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An Exchange Traded Fund (ETF) is a mutual fund scheme that is listed and traded on stock exchanges, quite like stocks.\u00a0 And like stocks, the price is quoted through the trading day and could vary. Like mutual fund, the Net Asset Value (NAV) is made of up of its holdings in stocks and other securities. Most ETFs track an underlying index. SBI ETF – Quality would be the 40th domestic ETF in India. (More here)<\/a> Being a passive investment, the parameters of an ETF are mostly derived from those of the underlying index. We would first look at this index.<\/span><\/p>\n

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NIFTY200 Quality 30 Index<\/span><\/h2>\n

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NIFTY200 Quality 30 Index\u00a0 (N200Q30) is a Strategic Index.<\/span><\/p>\n

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Strategy indices are designed on the basis of quantitative models \/ investment strategies to provide a single value for the aggregate performance of a number of companies.<\/span><\/p>\nnseindia.com<\/cite><\/span><\/blockquote>\n

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We have a good number of interesting, and useful, strategic indices in India. Some are equal weight versions of regular indices. some select a subset of broader stocks based on specific parameters, etc.\u00a0 NIFTY200 Quality 30 Index is a relatively new index that selects 30 ‘Quality’ stocks from Nifty200 – the top 200 stocks by market capitalization. This covers all the large cap stocks and the 100 biggest mid cap stocks.<\/span><\/p>\n

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NIFTY200 Quality 30 includes top 30 companies from its parent NIFTY 200, selected based on their\u00a0quality<\/em> scores. The quality score for each company is determined based on return on equity (ROE), financial leverage (Debt\/Equity Ratio) and earning (EPS) growth variability; analysed during the previous 5 years.<\/span>

Highlights:<\/strong><\/span><\/p>\n