The Mid Cap segment provides a sweet spot in terms of earnings stability and growth prospects compared to moderate growth in Large Caps and high volatility in Small Caps. The segment also provides attractive investment opportunities in key investment themes like Premiumization, Production Linked Incentive, China Plus One and Capital Expenditure. Hence, it isn’t surprising that many industry leaders are emerging within Mid-Caps.
Over the past 5 and 10 years, many mid-cap stocks have turned into multi-baggers. However, the midcap segment exhibits a large dispersion of returns, creating the need for a filter to select potential outperformers. This is where Momentum Investing comes in.
Momentum, a rule-based investing system that buys and sells based on past returns, has outperformed broad market indices consistently in the past. Momentum Investing works because investors rush to invest in an outperforming stock and this herding behavior solidifies the trend resulting in the stock price gathering momentum and thereby relatively higher return.
Tata Nifty Midcap 150 Momentum 50 Index Fund seeks to replicate Nifty 150 Momentum 50 Index. The index selects the top 50 stocks based on their momentum score out of a universe of 150 midcap stocks.