Motilal Oswal unveils Nifty 500 Momentum 50 Index Fund

• The NFO opens on 04 September, 2024 and closes on 18 September, 2024

Ahmedabad, 05 September 2024: Motilal Oswal Mutual Fund (MOMF) today announced the launch of its latest new fund offer, “Motilal Oswal Nifty 500 Momentum 50 Index Fund”. This is India’s first 500 Momentum 50 Index fund.  The new fund by MOAMC is an open-ended fund replicating/tracking the Nifty 500 Momentum 50 Total Return Index. The fund will offer exposure to stocks that are in the highest momentum across the large, mid, and small-cap segments of the Nifty 500 index.

The index has delivered 75.2% returns in the last 1 year & 35.9% in the past 5 years as of July 31, 2024. While Nifty 500 Momentum 50 exhibits strong performance potential, it may also experience higher volatility.

 About Nifty 500 Momentum 50

The Nifty 500 Momentum 50 index is based on the momentum investing strategy, which involves investing in stocks that have demonstrated strong performance over a recent period. The idea is that stocks that have performed well recently will continue to do so in the near future. The index is constituted considering the strong price performance of stocks in the previous 6 months and 1 year period. Further, stocks are selected from the universe of Nifty 500, thus unlike its predecessor Nifty 200 Momentum 30 Index, this index also includes stocks from the Small-cap segment. Historically it has been observed that the Momentum strategy works well in the bull and the recovery phase whereas may face challenges during the bear market phase.

Why Nifty 500 Momentum 50?

Historically, momentum strategies have performed well as compared to the broader market over long periods. The index follows a systematic and rules-based approach to select stocks, reducing the risk of emotional or biased decision-making. Investors looking to take exposure to the portfolio of strong-performing stocks may consider the Nifty 500 Momentum 50 index fund option. Investors should also note that this index can be volatile in the short to medium term.

Mr. Prateek Agrawal, MD and CEO of Motilal Oswal Asset Management Company Ltd., said, “Factor investing is relatively new in India, within which momentum investing growing rapidly. As of Q1 FY25, out of a total AUM of INR 35,954 crore in factor funds, momentum funds hold the largest share at INR 10,353 crore, highlighting the rapid expansion of momentum investing in the country. This growth can largely be attributed to momentum’s ability to adapt to trending sectors, as the Nifty 500 Momentum 50 TRI captures market trends early through dynamic sector rotation. Consequently, the Nifty 500 Momentum 50 TRI has outperformed the Nifty 50 TRI in 12 of the last 19 calendar years.

The Nifty 500 Momentum 50 has strongly outperformed the Nifty 50 which can be primarily attributed to the recent rally in the mid-cap and small-cap space which show how the Index broadly captures the momentum from all the 3 segments. Overall, the Nifty500 Momentum 50 TRI has significantly outperformed the Nifty 50 TRI over the last 15 years. The index SIP returns for the Nifty 500 Momentum 50 TRI have been 82% over 1 year, 45.6% over 3 years, 41.1% over 5 years, and 27.4% over 10 years. In comparison, the Nifty 50 TRI has delivered returns of 35.8%, 21.6%, 21.5%, and 16.3% respectively, for the same period from August 1, 2014, to July 31, 2024.

Mr. Pratik Oswal, Chief of Business – Passive Funds, Motilal Oswal Asset Management Company Ltd., said, “The Nifty 500 Momentum 50 TRI may remain a strong investment option due to its low-cost, rules-based, and transparent approach, its exposure to high-momentum stocks across Large, Mid, and Smallcap segments, and its potential to outperform in upward-trending markets. Since April 2005, the Nifty 500 Momentum 50 TRI has achieved an exceptional 76x growth, focusing on top-performing stocks across these segments.”

The fund will be managed by Mr. Swapnil Mayekar and Mr. Rakesh Shetty (debt component). Both the fund managers have more than a decade of experience in driving growth.

The investment objective of Motilal Oswal Nifty 500 Momentum 50 Index Fund is to provide returns that, before expenses, correspond to the total returns of the securities as represented by the Nifty 500 Momentum 50 Index, subject to tracking error. However, there is no guarantee or assurance that the investment objective of the scheme will be achieved.