BSE Launches 4 New Indices: Enhanced Value, Low Volatility, Momentum, Quality gauges select top 50 stocks basis key factors

BSE Gets 4 New Indices: Asia Index Pvt Ltd, a subsidiary of stock exchange BSE, on Tuesday announced the launch of four new gauges on the platform, expanding the bourse’s suite of smart beta offerings. Each aimed at selecting the top 50 scrips by important metrics such as value, volatility, momentum and quality, according to a press release. The indices are part of the exchange’s ‘factor’ series of gauges with quarterly reconstitution. Simply put, the indices will be reviewed on a quarterly basis to ensure the availability of updated information for investors. 

BSE Launches New Indices | Here are key things to know about this development: 

• Quarterly Reconstitution: This marks the first time the bourse’s indices will offer a quarterly reconstitution. 
• Base Value: Each of the four indices—the BSE 500 Enhanced Value 50, the BSE 500 Low Volatility 50, the BSE 500 Momentum 50 and the BSE 500 Quality 50—will have 1,000 as the base value.
• Base Date: The first value date will be June 20. 
• Liquidity Monitoring: The index components will be screened additionally for their liquidity profile, with a cap at 4 per cent. 
• Factor Investing: The rising popularity of factor investing in the country stems from sophisticated investors looking for alternative investing approaches. The factor style of or approach to investing involves the identification and investment in securities with specific attributes or ‘factors’ often associated with higher returns. 

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• The four indices can be used for running passive strategies such as exchange-traded funds (ETFs) and index funds.

• They will also gauge the performance of various sectors across the country.

• Investors will be able to use the indices for benchmarking of PMS strategies, MF schemes and fund portfolios.

“These indices are designed to provide market participants with targeted exposure to key investment factors such as value, low volatility, momentum, and quality using a transparent and rules-based approach,” said Ashutosh Singh, MD and CEO of Asia Index Pvt Ltd.

“The introduction of quarterly reconstitution schedule in our factor indexes will enable factor signals to capture the most recent financial and stock price data,” said Singh.

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