Nippon India Mutual Funds has introduced a unique investment opportunity with its new fund offer (NFO) based on the momentum theme.
This open-ended fund, named Nippon India Active Momentum Fund, is now available for investment.
Investors can invest in the NFO until 24 February. Following this period, the fund will reopen for continuous sale and repurchase starting 6 March.
What Makes This Fund Unique?
Rule-Based and Disciplined Approach
The fund follows a disciplined, rule-based investment strategy, minimizing emotional decision-making and human bias.
This approach focuses on the fundamental characteristics of stocks such as alpha, low volatility, quality, value, and growth.
The primary focus of this fund is the ‘momentum’ factor, which refers to the tendency of a stock’s price to maintain its direction over time.
Momentum as the Core Strategy
The concept of momentum relies on the idea that assets performing well may continue to do so, while poorly performing assets might lag further.
Nippon India Active Momentum Fund emphasizes momentum as a key strategy, given its dominant role in recent years. Historically, momentum-driven indices have delivered strong returns.
For instance, the Nifty 500 Momentum 50 Index has outperformed the Nifty 500 in 13 out of the last 19 years, with cumulative returns significantly higher during typical years.
Risks and Investment Details
Potential Risks of Momentum
While momentum investing can deliver strong returns, it may face challenges during critical market periods, such as the early phases of the COVID-19 pandemic or the global financial crisis.
To address this, the fund incorporates a mix of technical factors (price momentum) and fundamental factors (earnings revisions) to create a balanced strategy.
Investment Requirements
The minimum investment required for this NFO is Rs 500, with additional investments in multiples of one rupee.
Fund Management
The fund is managed by Ashutosh Bhargava and Kinjal Desai, with the benchmark being Nifty 500 TRI.
