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Passively Active – an investor education & awareness initiative by Mirae Asset Mutual Fund
What exactly is the momentum strategy?
- Momentum is a smart beta strategy that picks stocks based on their momentum scores
- According to the NSE’s index methodology, momentum score depends on the 6 months/12 months price return or performance of a stock after adjusting for volatility. Basically, top performing stocks within the index qualify under this factor
- Based on AUM data of passive funds available with AMFI as on August 2024, one of the most popular momentum index is Nifty 200 Momentum 30. This index picks 30 stocks based on their momentum score from the universe of top 200 companies
- Historically, the momentum strategy did well during the bull run
- Gives exposure to stocks, which may rise faster than broad based indices
- Cost effective way to invest in smart beta strategy
What are the risks?
- Risk of volatility cannot be avoided
- Heavy reliance on a mathematical formula to pick stocks, which may go wrong
- Momentum may be used to achieve long term goals like retirement, children education and so on or goals having investment horizon of at least 7 years
- Momentum funds can give your investment portfolio an edge especially during bull run
IAP Disclaimers:
An Investor Education and Awareness Initiative by Mirae Asset Mutual Fund . All Mutual Fund investors have to go through a one-time KYC (Know Your Customer) process. Investors should deal only with Registered Mutual Funds (RMF). For further information on KYC, RMFs and procedure to lodge a complaint in case of any grievance, you may refer the Knowledge Center section available on the website of Mirae Asset Mutual Fund.
In a newly launched an investor education & awareness initiative called Passively Active Mirae Asset Mutual Fund, the fund house simplifies the concept of momentum strategy.
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