Motilal Oswal Mutual Fund (MOMF) has introduced a groundbreaking investment product in the Indian market: the Motilal Oswal Nifty 500 Momentum 50 Index Fund. This open-ended index fund aims to capture the performance of high-momentum stocks within the Nifty 500 index. As India’s first 500 Momentum 50 Index Fund, it represents a significant innovation in the mutual fund space, providing investors with a new avenue to leverage momentum investing.
Motilal Oswal’s Innovative Index Fund
The newly launched Motilal Oswal Nifty 500 Momentum 50 Index Fund tracks the Nifty 500 Momentum 50 Total Return Index. This index focuses on stocks exhibiting the highest momentum across large-cap, mid-cap, and small-cap segments of the Nifty 500 index. As of July 31, 2024, the Nifty 500 Momentum 50 Index has demonstrated remarkable returns of 75.2% over the past year and 35.9% over the past five years. However, investors should be aware that while the fund showcases strong performance potential, it may also be subject to higher volatility.
Key Features of the Motilal Oswal Nifty 500 Momentum 50 Index Fund
- Momentum Strategy: The fund targets stocks that have shown strong price performance over the past six months and one year, aligning with a momentum investing approach.
- Diversification: The Nifty 500 Momentum 50 index includes a wide array of stocks across different market capitalizations, including large-cap, mid-cap, and small-cap, offering comprehensive market exposure.
- Historical Performance: The index has delivered impressive returns of 75.2% in the last year and 35.9% over the past five years, highlighting its potential for strong performance.
- Low-Cost Structure: The fund employs a cost-effective, rules-based investment strategy, making it accessible for a broad range of investors.
Why Invest in the Motilal Oswal Nifty 500 Momentum 50 Index Fund?
- Strong Historical Performance: The Nifty 500 Momentum 50 Index has consistently outperformed broader market indices in recent years, making it a compelling option for investors seeking growth.
- Diversification: By investing in this fund, individuals gain exposure to a diversified portfolio of high-performing stocks, reducing risk through broad market representation.
- Systematic Approach: The fund’s rules-based investment strategy helps mitigate emotional and biased decision-making, offering a disciplined investment approach.
- Potential for Outperformance: The focus on momentum stocks positions the fund well for strong returns in upward-trending market conditions, leveraging market trends for potential gains.
Fund Management and Investment Objective
The Motilal Oswal Nifty 500 Momentum 50 Index Fund will be managed by Mr. Swapnil Mayekar and Mr. Rakesh Shetty, both seasoned professionals with extensive experience in the industry. The fund’s primary objective is to replicate the total returns of the Nifty 500 Momentum 50 Index, subject to minor tracking errors.
NFO Details
The new fund offer (NFO) for the Motilal Oswal Nifty 500 Momentum 50 Index Fund will be open from September 4, 2024, to September 18, 2024. Prospective investors are advised to consult with their financial advisors to determine if this fund aligns with their investment goals and risk tolerance.
Motilal Oswal’s Role in Momentum Investing
Motilal Oswal has been a pioneering force in introducing innovative investment products to the Indian market. Prateek Agrawal, MD and CEO of Motilal Oswal Asset Management Company, emphasized the rapid growth of momentum investing in India. He noted that as of Q1 FY25, momentum funds hold the largest share of factor funds’ assets under management (AUM) at INR 10,353 crore. This growth underscores the increasing popularity of momentum investing, which adapts well to trending sectors. The Nifty 500 Momentum 50 TRI, through its dynamic sector rotation, has outperformed the Nifty 50 TRI in 12 of the last 19 calendar years.
About the Nifty 500 Momentum 50 Index
The Nifty 500 Momentum 50 Index follows a momentum investing strategy, targeting stocks that have demonstrated strong recent performance with the expectation that they will continue to perform well. This index encompasses a diverse range of stocks from the Nifty 500, including those from large-cap, mid-cap, and small-cap segments, thereby offering a comprehensive view of market momentum. Unlike its predecessor, the Nifty 200 Momentum 30 Index, the Nifty 500 Momentum 50 Index includes stocks from the small-cap segment, enhancing its market coverage.
Historically, the momentum strategy has proven effective during bull and recovery phases but may encounter challenges during bear markets. The Nifty 500 Momentum 50 Index has significantly outperformed the Nifty 50 TRI over the last 15 years, delivering superior returns across various time frames. For instance, the index’s SIP returns have been 82% over one year, 45.6% over three years, 41.1% over five years, and 27.4% over ten years, compared to the Nifty 50 TRI’s returns of 35.8%, 21.6%, 21.5%, and 16.3%, respectively.
The launch of the Motilal Oswal Nifty 500 Momentum 50 Index Fund represents a significant development in the Indian mutual fund landscape, offering investors a unique opportunity to participate in high-momentum stocks and potentially benefit from their growth.
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