What is Nifty 500 Multifactor MQVLv 50 Index

The Nifty500 Multifactor MQVLv 50 Index is a strategy index that aims to track the performance of a basket of 50 stocks chosen from the broad-based Nifty 500 Index. The stocks included as part of the Nifty 500 Multifactor MQVLv 50 Index are selected by employing a combination of 4 key factors - momentum, quality, value and low volatility.

Since the Nifty 500 Index is a broad-based index, the Nifty 500 Multifactor MQVLv 50 Index features stocks across different market capitalisations and industries/sectors. This diversification has the potential to optimise overall returns of the index, while minimizing the overall risk for investors.

The Nifty 500 Multifactor MQVLv 50 Index is reconstituted and rebalanced on a semi-annual basis in the months of June and December. At these times, new stocks can be included into the index and existing stocks that no longer fulfill the selection criteria are removed from the index. Now let’s take a closer look at the factors used in selecting stocks for this equity index.

Know More: What is Momentum Investing?

The Nifty 500 Index acts as the stock universe for the Nifty 500 Multifactor MQVLv 50 Index. So stocks that are not featured in the Nifty 500 are not eligible for inclusion. Additionally, stocks must have a minimum listing history of 1 year to qualify for inclusion. Apart from these there are other exclusion criteria to consider, for instance, a stock is also considered ineligible if the company’s promoters have pledged more than 20% of their share-holdings or if the stock has scored low on liquidity parameters.

Detailed information regarding exclusion and inclusion criteria applicable to this index are available in the stock selection methodology document on the official Nifty Indices website. As already mentioned earlier, stock selection methodology used by the Nifty 500 Multifactor MQVLv 50 Index incorporates 4 different factors. Below are details of how the scores based on these factors are calculated for each Nifty 500 stock that is eligible for inclusion into the Nifty 500 Multifactor MQVLv 50 Index:

• Momentum: Momentum score of each stock is calculated based on 6-month and 12-month price returns, adjusted for volatility. A list of 25 with the highest percentile momentum score are selected for the subsequent screening.
• Quality: Quality score of stocks is determined based on return on equity (ROE), economic leverage (debt-to-equity ratio), and earnings per share (EPS) growth diversity over the past five years. The 25 stocks with the highest percentile quality score are selected for subsequent screening.
• Value: Value score of individual stocks is calculated using the earnings-to-price (E/P) ratio, book value-to-price (B/P) ratio, sales-to-price (S/P) ratio, and dividend yield. The top 25 stocks featuring the highest percentile value score are selected for subsequent screening.
• Low Volatility: Low volatility score is calculated as inverse of the standard deviation based on the daily price returns over the previous 1-year period. A list of 25 stocks with the lowest percentile volatility score is selected for further screening.

Once a list of up to 100 stocks in total has been obtained i.e. 25 stocks selected on the basis of each factor, the composite percentile score of each stock is calculated. Finally, the top 50 stocks with the highest composite percentile score across all 4 factors are selected for inclusion into the Nifty 500 Multifactor MQVLv 50 Index

Nifty 500 Multifactor MQVLv 50 Index has shown robust performance with superior risk-adjusted returns in the long term. The below table illustrates the returns of this index over different time periods as of 24th April 2025:

Note: In the above table 3 year, 5 year, 10 year returns and returns since inception data are CAGR returns. Returns data as of 24 April, 2025.

As you can see, the Nifty 500 Multifactor MQVLv 50 Index has given significantly high 5 years, 10 years CAGR returns as well as returns since inception that were recorded at 29.04%, 17.16% and 21.00% respectively. While prior performance of the index does not guarantee future returns generated by the index, historical data does indicate the potential for high long-term returns in the long-term.

Also Read: Annual, Trailing and Rolling Returns

Currently you can invest or trade in the stocks that constitute the Nifty 500 Multifactor MQVLv 50 Index by directly purchasing shares on the stock exchange. However, the direct purchase of shares in the right proportions to re-create the index will require substantial time and effort. Additionally, you would also require to periodically balance this basket of stocks as per the rebalancing schedule of the Index.

A much easier alternative is to invest through passively managed exchange traded funds (ETFs) or Index Funds such as the Axis Max Life Nifty 500 Multifactor 50 Index Fund that tracks the index. Investing in an Index through ETFs and Index Funds provide a more affordable and transparent professionally managed investment option that has the potential to provide investors with returns that are close to that of the index being tracked within the margins of tracking error.