Kotak Mahindra Mutual Fund will launch an open-ended scheme replicating the Nifty 200 Momentum 30 Index on May 25, 2023. The new fund offer (NFO) period ends on June 8, 2023. The index fund will use momentum-based investing strategy
Kotak Mahindra Mutual Fund on May 23, 2023 announced the launch of the Kotak Nifty 200 Momentum 30 Index Fund, an open-ended scheme that replicates the Nifty 200 Momentum 30 Index. The fund’s new fund offer (NFO) will open for subscription on May 25, 2023 and will close on June 8, 2023.
The Nifty 200 Momentum 30 Index aims to track the performance of the top 30 companies within the Nifty 200, selected based on their normalised momentum score.
“This normalised momentum score is determined by a 6-month and 12-month price return, adjusted for volatility. This selection offers investors exposure to momentum stocks across market capitalisations and diverse sectors,” Kotak Mahindra Mutual Fund announced in a release.
Nilesh Shah, managing director, Kotak Mahindra Asset Management Company (AMC) said that the investing strategy of Kotak Nifty 200 Momentum 30 Index Fund, takes advantage of the persistence of stock price trends.
“It captures the potential of stocks that show a strong trend in price movement relative to overall market trend. This approach to investing can be potentially beneficial during periods of economic growth. But one should keep in mind that momentum investing can be volatile. With the launch of this smart beta index fund, we further strengthen our overall passive fund offerings,” he said.
Index Funds And Momentum Investing
Index Funds typically replicate the composition of the target index, aiming to generate returns commensurate with their performance. As a passive fund, they offer the advantage of lower management costs by tracking the benchmark index, which results in fewer short-term trading activities.
While it lacks an active fund manager, this passive approach is ideal for investors seeking returns that track the broader market passively at a relatively lower cost.
But momentum investing may require increased buying and selling stocks based on the trend of current market movements as it always seek to capitalise on market volatility.
Who Should Invest
According to Kotak Mahindra Mutual Fund, the Kotak Nifty 200 Momentum 30 Index Fund is ideal for investors seeking long-term capital appreciation. Further as the fund offers a passive investment in stocks mirroring the Nifty 200 Momentum 30 Index’s composition by investing in the same securities as the index, it also provides diversification across all sectors, thus reducing risk.