Motilal Oswal Mutual Fund has introduced the Nifty 500 Momentum 50 Index Fund, an open-ended scheme tracking the Nifty 500 Momentum 50 Total Return Index (TRI). The New Fund Offer (NFO) runs from September 4th to September 18th, 2024, providing investors a chance to participate during this period.
This fund replicates the performance of 50 stocks from the Nifty 500 Index, selected for their strong momentum across large, mid, and small-cap segments. The strategy focuses on stocks that have exhibited recent outperformance, assuming that these stocks may continue their momentum in the near term.
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Key Features:
- NFO Period: September 4 – 18, 2024
- Fund Managers: Swapnil Mayekar and Rakesh Shetty
- Benchmark: Nifty 500 Momentum 50 TRI
- Minimum Investment: ₹500 (initial), ₹1 for subsequent
- Plans Available: Regular and Direct (Growth Option only)
- Load Structure: No entry load; 1% exit load if redeemed within 15 days
- Volatility: Momentum-based strategy may result in short-term volatility
The fund utilizes a systematic approach to select the top 50 stocks based on their Normalized Momentum Score, adjusted for volatility. This rules-based method ensures a balanced selection of stocks with strong recent performance.
Prateek Agrawal, MD and CEO of Motilal Oswal Asset Management, emphasized the growing interest in momentum investing, which allows investors to benefit from trending sectors. Momentum funds are gaining popularity due to their ability to adapt to market trends, making them attractive in favourable conditions.
Top 10 Constituents:
The fund is concentrated, with the top 10 stocks accounting for 45.2% of the portfolio. Leading the way are Trent Ltd. (5.2%), Adani Ports (5.1%), Bharat Electronics (4.8%), and Bajaj Auto (4.7%). Other major players include Mahindra & Mahindra (4.7%), REC Ltd. (4.4%), and Siemens (4.4%). The portfolio also includes Power Finance Corp. and Tata Power.
Sector and Market Cap Allocation:
- Industrials: 35.71%
- Consumer Discretionary: 23.95%
- Financial Services: 17.27%
- Utilities: 10.54%
- Other sectors: Services, Commodities, Energy, Healthcare
The fund is 64.02% large-cap, 32.04% mid-cap, and 3.94% small-cap, offering a mix of stability and growth potential.
Historical Performance:
The Nifty 500 Momentum 50 Index has shown strong performance, delivering 69.51% returns over the past year and a 35.77% compound annual growth rate (CAGR) over the last five years.
Benefits:
- Strong Historical Performance: Outperformed Nifty 50 TRI in 12 of the last 19 calendar years.
- Diversified Exposure: Large, mid, and small-cap stocks offer broad market coverage.
- Systematic Approach: Transparent, rules-based investing avoids emotional decision-making.
While the momentum strategy works well in rising markets, it may result in higher short-term volatility during downturns, making it ideal for investors comfortable with some risk.
The Motilal Oswal Nifty 500 Momentum 50 Index Fund offers a low-cost, transparent option for those seeking exposure to high-momentum stocks across market caps. It's well-suited for investors looking for potentially significant returns in upward-trending markets, but it requires a tolerance for volatility.
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