Nippon India Mutual Fund has introduced a unique new fund offer centered around the momentum theme.
The Nippon India Active Momentum Fund Strategy Fund will be available for subscription from February 10 to 24.
Factor investing is a methodical, rules-based approach that minimizes emotional decision-making and human bias. It is based on fundamental attributes of stocks such as alpha, low volatility, quality, value, and growth.
This new fund offer is focused on momentum, which identifies stocks that continue to move in the same direction over time.
The concept is built on the idea that assets that have performed well in the past may continue to perform well in the future, and vice versa for underperforming assets.
On an average year, momentum as an index surpasses returns cumulatively (around 8 times), with the Nifty 500 Momentum 50 index outperforming the Nifty 500 in 13 out of the last 19 years.
However, momentum portfolios can face significant underperformance at critical turning points like during the early stages of the pandemic and the global financial crisis.
To address this, the fund strategy aims to strike a balance between technical (price momentum) and fundamental factors (earnings revision).
The fund will utilize conditional indicators like beta and minimum volatility to maximize the benefits of a market uptrend and minimize volatility during downturns.
