The Momentum factor aims to deliver a portfolio of top performing stocks based on price performance.
Motilal Oswal presents an opportunity to experience the benefits of Momentum investing with the Motilal Oswal Nifty 500 Momentum 50 Index Fund.
Highlights of the Nifty 500 Momentum 50 index:
Better long-term performance –
Delivered 25.2% CAGR since April 2005, whereas the Nifty 50 only delivered 15.2% CAGR
A mix of Large, Mid, & Small cap stocks –
The index selects top performing stocks from all three market segments, offering a diversified portfolio of momentum stocks
Effectively picks up on trending sectors
Top momentum stocks deliver market trends early with dynamic sector rotation
Significantly outperforms during the bull market cycle
Historically, the momentum factor has significantly outperformed during the bull market cycle
The Motilal Oswal Nifty 500 Momentum 50 Index Fund is the industry’s first scheme tracking top 50 momentum stocks from the nifty 500 universe.
Source/Disclaimer : MOAMC Research, NSE; Data as of 31-Jul-2024. The information / data herein alone is not sufficient and should not be used for implementation of an investment strategy. The table/charts mentioned above are used to explain the concept and is for illustration purpose only It should not be construed as an investment advice to any party. Past performance may or may not be sustained in future and is not a guarantee of any future return
The weightage of these 50 stocks will be based on what? It would be great to see how many from the nifty 50 and nifty next 50 get to be in this. If majority are from these two will it not be the same. No point having a stock from 500 having weightage of say 0.25 for name sake purpose.
Let the nfo get subscribed and then see who are the constituents and then invest.
When investing in smart beta themes like momentum, u just go with the flow, this is like investing like a swing trader, as momentum is a technical indicator unlike other smart beta indices like Alpha,Value and quality which are based on the fundamentals of a stock.
So you shouldn’t be bothered about the Index constituents more, as u r investing in the theme more than the stocks.
Since the rebalancing/reconstitution happens semi-annually, any stock which showed momentum during the initials months could turn bearish and can wipe away the returns before it is removed from the index. We need to be able to decide when to enter and when to exit. As momentum works well during a bull run, but drawdown will be more during a bearish phase.
This is a major risk. Not sure why the original post from motilal oswal did not mention this. After reading this, I went back to Mirae Asset S&P 500 Top 50 and checked on what basis they identify their constitutents. It says “Index constitutents are weighted by float adjusted market capitalisation”.
This in my view means similar to stocks in Nifty 50, the best stocks based on market cap is selected and money is invested there.
Is there any hidden risk like the way you mentioned for momentum thing. All I want is money being invested in top 50 stocks in the 500.
I was of the view that momentum would mean in any way the top corporates in India. After reading the risk, I reaslised that any stock which just goes up due to price movement could be a part of the fund - this is not what I want.
Yeah, you could consider the MASPTOP50 as the U.S. equivalent of Nifty 50. As the name suggests it invests in the Top 50 and since it is S&P500 it includes more sectors, unlike the NASDAQ which is very Tech heavy.
Only the smart beta indices will pick the index constituents based on one or more of the fundamental or technical indicators.
Rest all indices just pick the constituents based on the free float mcap.
From a quick glance, majority of the constituents of this index, do seem to be from the nifty 100 universe, So this may not be that risky, it still invests in Top 100 mostly.
Like i mentioned, in bull markets Momentum can give great returns, since the returns are high, they do come with some risk, but ultimately this risk gets nullified in the long run. We could see that it has beta similar to or even lower than Nifty 50 in long run.
Entire concept behind momentum is you are hoping it will continue it’s performance due to inertia and market effects. So if you believe in momentum then this is right for you. Else it is false. The rebalancing timeframe does not matter much if your assessment timeframe also increases proportionally.
And if you don’t believe in that inertia then momentum is not for you, there are tons of other great strategies too.
I am already invested in Nifty 200 Momentum 30 ETF. I am considering switching over to Nifty 500 Momentum 50 to include the Smallcase momentum stocks as well. Would there be an ETF option also?
Thanks for the reply - it is very clear now. My priority is 1. Be invested in the best of the best corporates in India. 2. Returns are secondary - should give better than FD.
I have SBI nifty 50 ETF based on market cap. I am now investing incremental money in SBI nifty 50 equal weighted as I feel the back benchers in Nifty 50 are not given priority - some of the good names have a weightage less than 0.70. Hope both balances out.
Benefit from the momentum of top-performing stocks with the Motilal Oswal Nifty 500 Momentum 50 Index Fund—an innovative strategy to capture potential growth.
