Motilal Oswal Mutual Fund (MOMF) has introduced a new fund offering (NFO), the Motilal Oswal Nifty 500 Momentum 50 Index Fund. This open-ended index fund seeks to replicate the performance of high-momentum equities in the Nifty 500 index.
The company said that this will be India's first 500 Momentum 50 Index fund. The new MOAMC fund will track the Nifty 500 Momentum 50 Total Return Index. The fund will invest in stocks with the strongest momentum in the Nifty 500's large, mid, and small-cap divisions. As of July 31, 2024, the index has returned 75.2% in the last year and 35.9% during the previous five years. While the Nifty 500 Momentum 50 has tremendous growth potential, it may also face increased volatility.
Key features:
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Momentum Strategy: The fund invests in stocks that have had good price performance in the previous six months and one year.
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Diversification: The Nifty 500 Momentum 50 index contains stocks in all three market capitalization categories: large-cap, mid-cap, and small-cap.
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Historical Performance: The index returned 75.2% last year and 35.9% over the last five years.
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Low-Cost Structure: The fund takes a low-cost, rule-based approach to investing.
Why Should I Invest in the Nifty 500 Momentum 50 Index Fund?
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Strong Historical Performance: The index has consistently outperformed the broader market in recent years.
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Diversification: Investing in the Nifty 500 Momentum 50 index gives you access to a diverse selection of top-performing stocks.
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Systematic Approach: The fund's rules-based technique lowers the likelihood of emotional or biased decision-making.
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Outperformance Potential: Because the index focuses on momentum stocks, it has the potential to deliver large returns in rising market conditions.
Fund management:
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Mr. Swapnil Mayekar and Mr. Rakesh Shetty will manage the fund, and both have substantial industry experience.
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The fund's goal is to offer returns that match the total returns of the Nifty 500 Momentum 50 Index, subject to tracking error.
NFO details:
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The NFO begins on September 4, 2024 and ends on September 18, 2024.
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Investors should speak with their financial advisors to decide whether this fund is appropriate for their investing objectives.
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The Motilal Oswal Nifty 500 Momentum 50 Index Fund allows investors to participate in the growth of high-momentum stocks in India's equity market.
"Factor investing is relatively new in India, and momentum investing is fast expanding. As of Q1 FY25, momentum funds accounted for the majority of the entire AUM of Rs 35,954 crore in factor funds, at INR 10,353 crore, highlighting the country's significant rise of momentum investing. This growth is partly due to momentum's capacity to adapt to trending sectors, since the Nifty 500 Momentum 50 TRI detects market movements early on through dynamic sector rotation. As a result, the Nifty 500 Momentum 50 TRI has outperformed the Nifty 50 TRI in 12 of the previous 19 calendar years," stated Prateek Agrawal, MD and CEO of Motilal Oswal Asset Management Company.
About Nifty 500 Momentum 50
The Nifty 500 Momentum 50 index is based on the momentum investing technique, which invests in stocks that have recently performed well. Stocks that have lately performed well are expected to do so again in the near future. The index is based on the strong price performance of equities over the past six months and one year periods. Furthermore, equities are selected from the Nifty 500 universe, therefore unlike its predecessor, the Nifty 200 Momentum 30 Index, this index includes firms from the Small-cap class.
"Historically, it has been found that the Momentum strategy performs well in the bull and recovery phases, but may struggle during the bad market phase. The Nifty 500 Momentum 50 has significantly outperformed the Nifty 50, owing mostly to the current surge in the mid-cap and small-cap spaces, demonstrating how the Index comprehensively captures momentum from all three sectors. Overall, the Nifty500 Momentum 50 TRI has outperformed the Nifty 50 TRI during the past 15 years.
The Nifty 500 Momentum 50 TRI has an index SIP return of 82% over one year, 45.6% over three years, 41.1% over five years, and 27.4% over ten years. In comparison, the Nifty 50 TRI returned 35.8%, 21.6%, 21.5%, and 16.3% from August 1, 2014 to July 31, 2024, according to Motilal Oswal in a release.
