Motilal Oswal Asset Management Company has launched Hedged Equity Multifactor Strategy AIF.
The open-ended quantitative equity fund in the Category-III AIF segment combines multifactor, model-driven investing approach along with tail-hedging.
The scheme is designed to have a low overlap with Nifty50 companies and correlation of about 65-70 per cent leading to a differentiated portfolio exposure.
The equity portfolio has no human intervention in stock selection and weighting. The equity strategy uses investment factors such as quality, low volatility, value, and momentum to form a concentrated portfolio of 20-25 equity stocks.
Tail-Hedging is designed to protect investor from an unpredictable black swan events, but have been the most significant contributors of portfolio losses. The fund seeks to provide protection by creating a low-cost ‘long volatility’ position that benefits when the market volatility shoots up during such periods.
The back-tested returns of the strategy since 2011 has consistently generated higher returns at lower volatility as compared to its benchmark Nifty 500 TRI.
Pratik Oswal, Head of Passive Funds, Motilal Oswal AMC , said, “it is a unique offering that combines the benefits of rules-based investing and tail-hedging with the objective of delivering superior portfolio outcomes across various market conditions.”