Axis Nifty500 Momentum 50 Index Fund: A Smart Bet on Market Trends

Jan 28, 2025

Axis Mutual Fund has launched Axis Nifty500 Momentum 50 Index Fund, it is an open-ended scheme replicating/tracking the Nifty500 Momentum 50 Index.

Momentum investing has gained significant traction in recent years as investors increasingly look for strategies that capitalize on market trends. In the current market environment, characterized by sharp sectoral shifts and heightened volatility, momentum investing could help identify stocks that are outperforming their peers based on recent price movements.

[Read: Will Momentum Investing Work in 2025?]

By focusing on companies with strong upward momentum, this strategy aims to ride market trends and deliver potentially higher returns, especially during bullish phases. However, it also comes with risks, particularly in choppy or bearish markets where trends can reverse quickly.

The launch of the Axis Nifty500 Momentum 50 Index Fund provides investors with a structured and cost-effective way to participate in momentum investing.

Details of Axis Nifty500 Momentum 50 Index Fund:

Investment Objective To provide returns before expenses that correspond to the Nifty500 Momentum 50 TRI subject to tracking errors. There is no assurance that the investment objective of the scheme will be achieved.
Category Index Fund
SIP/STP/SWP Available
Min. Investment Rs 100/- and in multiples of Re 1 thereafter. Additional Purchase Rs 100/- and in multiples of Re 1 thereafter. Face Value Rs 10/- per unit
Plans
  • Direct
  • Regular
Options
  • Growth
Entry Load Not Applicable Exit Load
  • If redeemed/ switched out within 15 days from the date of allotment: 0.25% b)
  • If redeemed/ switched out after 15 days from the date of allotment: Nil
Fund Manager - Mr Karthik Kumar
- Mr Sachin Relekar
Benchmark Index Nifty500 Momentum 50 TRI
Issue Opens: January 24, 2025 Issue Closes: February 07, 2025
(Source: Scheme Information Document)

What will be the investment strategy for Axis Nifty500 Momentum 50 Index Fund?

Axis Nifty500 Momentum 50 Index Fund will invest in stocks comprising the underlying index and shall track the benchmark index. The Scheme may also invest in debt and money market instruments, in compliance with Regulations to meet liquidity and expense requirements.

The Scheme will invest in stocks forming part of the underlying Index in the same ratio as per the index, to the extent possible and to that extent follow a passive investment strategy, except to the extent of meeting liquidity and expense requirements. Events like the constituent stocks becoming illiquid in the cash market, the exchange changing the constituents, a large dividend going ex but lag in its receipts, etc. tend to increase the tracking error.

About Nifty500 Momentum 50 Index

Nifty500 Momentum 50 Index is a thematic index that selects 50 stocks from the Nifty 500 universe based on their momentum scores. Momentum scores are determined using a stock's price performance over the last six and twelve months, adjusted for volatility.

The index focuses on capturing the top-performing stocks that exhibit strong and sustained upward price trends, providing investors with exposure to a concentrated portfolio of high-momentum companies.

Data as of January 28, 2025
(Source: NSE - Nifty500 Momentum 50 Index)

However, given its nature, the index tends to be more volatile and concentrated in specific sectors or stocks during market rallies, making it suitable for investors with a high-risk appetite who understand the cyclical nature of momentum investing.

How will the scheme allocate its assets?

Under normal circumstances, Axis Nifty500 Momentum 50 Index Fund will hold an allocation of 95% to 100% in Securities covered by Nifty500 Momentum 50 Index and 0% to 5% in Debt & Money Market Instruments.

Should investments in Axis Nifty500 Momentum 50 Index Fund be considered?

Axis Nifty500 Momentum 50 Index Fund is a relatively new entrant in the passive investment space, offering exposure to a portfolio of 50 high-momentum stocks from the Nifty 500 index. Momentum investing focuses on stocks that have shown strong price performance over a defined period. This strategy aims to capitalize on the 'trend-following' behaviour in markets, where past winners often continue to perform well in the near term.

The Axis Nifty500 Momentum 50 Index Fund tracks the Nifty500 Momentum 50 Index, however, the success of this fund depends on timing and market cycles, as momentum investing can underperform during periods of high volatility or when trends reverse.

One of the advantages of this fund is its passive nature, which generally results in lower expense ratios compared to actively managed funds. Investors seeking diversification across high-performing stocks, without the need to pick individual winners, may find this fund appealing. Additionally, since the fund spans multiple sectors and focuses on relative strength, it provides an interesting mix of growth potential and diversification. However, investors must be mindful of concentration risks, as momentum strategies tend to overweight specific sectors during bullish phases.

The fund is also sensitive to market timing, prolonged bearish or sideways markets could lead to underperformance. Thus, investors with a long-term horizon and moderate risk appetite might want to pair this fund with more stable investments like large-cap or flexi-cap funds.

The Axis Nifty500 Momentum 50 Index Fund could be a good addition for investors looking to enhance returns through momentum-based strategies, provided they are aware of the inherent risks. Understanding your risk tolerance and investment goals is key before venturing into such niche funds.