Baroda BNP Paribas MF launches Nifty200 Momentum 30 Index Fund for Momentum Investing
Baroda BNP Paribas Mutual Fund has recently notified the launch of an open-ended scheme, namely the Baroda BNP Paribas Nifty200 Momentum 30 Index Fund, which will seek to replicate or track the NIFTY200 Momentum 30 Total Returns Index. The New Fund Offer (NFO) will open for subscription on September 25 and close on October 9, 2024.
The first and foremost purpose of such a fund is to be able to tap into the momentum of the passive system, which invests in the top 30 momentum stocks from the Nifty 200 Total Return Index. Such a momentum strategy has been picked purely based on historical performances because, of course, history repeats itself. The aim of the scheme is to generate returns closely aligned with the total returns on the securities represented by the Nifty200 Momentum 30 Total Returns Index after tracking errors, fees and expense adjustments.
It will be benchmarked against the Nifty200 Momentum 30 Total Returns Index. The scheme is managed by Neeraj Saxena. The scheme will invest 95%-100% of its assets in equity and equity-related instruments of the companies existing in the Nifty200 Momentum 30 Total Returns Index. Money market instruments, units of liquid schemes, cash and cash equivalents shall constitute 0%-5%.
This price momentum-based fund enables investors to upgrade their holdings with ones showing an upward trend in their price action. The strategy will focus on stocks witnessing tailwinds, assuming that stocks which have a current upward trend will continue to experience a similar positive movement. Besides, this investment approach will again contain risk due to the constraint of limiting to a universe of NIFTY 200 constituents, which is also the biggest 200 companies by market capitalization.
Exit loads of 0.2% would be levied if redeemed within seven days of allotment; otherwise, there will be no exit load. The minimum investment in the fund is Rs.1,000 and further investments in units would be in Re 1 multiples. For SIPs of daily, weekly, or monthly investments, the minimum amount is Rs.500, with successive contributions in Re 1 multiples.
Based on a lot of factors, the momentum strategy has been amongst the best performing strategies in India historically. Performance by back-testing the Nifty200 Momentum 30 Index is strengthened against the Nifty 50 Index results. This strategy offers investors the cost efficiency of passive investing together with the potential for outperformance offered by factor-based investing.
It would be suitable for those investors who want to invest in equity and equity-related instruments with an objective of long-term capital appreciation so that their returns are proxied as close to the said index, considering tracking error.
