This fund seems to be suitable for those looking for growing their capital in the long term. It will attempt to replicate the performance of the Nifty 500 Momentum 50 TRI. The risk-o-meter categorises it as “very high”.
The NFO has opened on September 11 and it will be on offer till September 25. Like any index fund, it will be a passive fund. But momentum-driven stocks will be in focus of this fund.
Momentum investing
“Since this fund has identified momentum as a strategy, it is essential to know what the index consists of. It aims to capture a strategy where advancing securities are bought, and later sold when they appear to have reached their peaks. The idea is to leverage their rising momentum. The investor typically captures the short-term uptrends only to sell the securities when the momentum starts wearing off,” Nilanjan Dey, investment strategist and director, Wishlist Capital told News9live.
Top 50 with strong price momentum
This fund will invest in securities consisting Nifty 500 Momentum 50 Index. It selects the top 50 companies which shows strong price momentum from the broader Nifty 500 Index. “The concept is based on the premise that stocks exhibiting relatively strong performance in the recent past are likely to maintain that trajectory…,” said Nippon AMC authorities.
Tale of 2 indices
Comparing Nifty 500 Momentum 50 TRI and Nifty 500 TRI, Nippon AMC has furnished the following data on their average rolling returns (%)– Nifty 500 Momentum 50 TRI 28% and Nifty 500 TRI 17.3% in the past 1 year; Nifty 500 Momentum 50 TRI 19.9% and Nifty 500 TRI 12.6% in the past 2 years; Nifty 500 Momentum 50 TRI 19.4% and Nifty 500 TRI 12.3% in the past 5 year; Nifty 500 Momentum 50 TRI 20.5% and Nifty 500 TRI 12.5% in the past 10 years.
Elaborating on the growing popularity of index funds on the whole, Dey also said that investors are gradually coming around to the view that it is humanly impossible to generate high returns year after year, no matter how efficient a fund manager is. Therefore, due to lower expense ratios and broad-based nature of index funds, this category is becoming more and more acceptable.
(Disclaimer: This article is only meant to provide information. News9live.com does not recommend buying or selling shares or subscriptions of any IPO and Mutual Funds.)
New NFO: Nippon India Nifty 500 Momentum 50 Index Fund – As a category index funds are becoming more and more popular in India. The history of index funds goes back to the 1990s when UTI pioneered the concept in India. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
