Tata AIA’s new unit-linked fund cuts sharp price swings

The strategy uses low volatility, quality value and momentum factors.

Tata AIA Life Insurance has launched a new unit-linked fund that aims to help investors manage market volatility through a low-volatility, multifactor investment strategy.

The Tata AIA Multifactor Index Fund combines equity market exposure with life insurance protection and will be available through the insurer’s range of unit-linked insurance plans (ULIPs).

The fund invests in 50 companies selected from the Nifty 500 universe using four factors: low volatility, quality, value and momentum. 

Tata AIA said the strategy is designed to provide more stable participation in equity markets whilst reducing exposure to sharp price fluctuations during volatile market conditions.

The insurer said the launch comes as investors face uncertainty from global economic conditions, interest rate movements and geopolitical developments.

The fund seeks to address these concerns through a rules-based investment approach that combines multiple return drivers rather than relying on a single investment theme or style.

The Tata AIA Multifactor Index Fund tracks a customised version of the Nifty 500 Multifactor MQVLv 50 Index. 

It will maintain an equity allocation of between 80% and 100%, with up to 20% allocated to cash and money market instruments. 

Stock selection is based on a quantitative framework designed to reduce discretionary decision-making and ensure consistency in portfolio construction and rebalancing.

Tata AIA noted that the Multifactor Index Fund carries a high-risk profile and that past performance is not indicative of future returns. 

The company also reminded investors that market-linked investments are subject to market risks and that ULIP investments do not offer liquidity during the first five years of the policy term.