Mumbai: NSE Indices Ltd., an NSE group company, has today launched a value-factor based
smart-beta index namely, NIFTY500 Value 50.
NSE Indices launches NIFTY500 Value 50
The NIFTY500 Value 50 index consists of 50 companies from its parent NIFTY 500 index,
selected based on their ‘value’ scores. The value score of each company is determined based on
Earnings to Price ratio (E/P), Book Value to Price ratio (B/P), Sales to Price ratio (S/P) and
Dividend Yield. The weight of each stock in the index is based on a combination of stock’s value
score and its free float market capitalization.
The base date for the index is April 01, 2005 and base value is 1000. The index composition is
reconstituted on a semi-annual basis.
“The concept of ‘Value Investing’, which is an art of buying stocks trading at lower prices in
comparison to their intrinsic values, has been in existence for decades. NIFTY500 Value 50, a
smart beta index, captures performance of 50 such ‘value’ companies across size segments and
sectors. The stocks are identified using a unique rule-based stock-selection methodology based on
price multiples and dividend yield – a methodology which is backed by robust theses and extensive
back-testing”, said Mukesh Agarwal, CEO – NSE Indices Ltd.
The NIFTY500 Value 50 index will be calculated on an end-of-day basis. The index presents an
ideal fit for investment community looking to align their investments on value based strategy and
is expected to be reference index tracked by passive funds in the form of Exchange Traded Funds
(ETFs), index funds and structured products.
The index is also well suited for benchmarking needs
of funds based on ‘value’ as an investment theme.