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Axis Mutual Fund on Monday launched the Axis Momentum Fund—an open-ended equity scheme following the Momentum Theme. The New Fund Offer ( NFO) opened on 22 November, 2024 and closes on 6 December, 2024.
Understanding Momentum Investing
Momentum investing, as a strategy focuses on identifying and capitalizing on underlying securities with strong upward trends. Unlike the usual approach of seeking undervalued stocks or high-growth companies, momentum investing embraces the principle of "buying high to sell higher." While often simplified, momentum investing is rooted in rigorous quantitative analysis.
"By applying robust filters, the strategy screens for stocks with strong performance indicators, making it adaptable to varying market conditions and reducing the influence of emotional biases on decision-making. In India, momentum investing benefits from historical performance data, with momentum indices like the Nifty200 Momentum 30 frequently outperforming broader benchmarks on a risk-adjusted basis," Axis MF said in a statement.
With a structured and model-based approach for a strong framework, the investment objective of the scheme is to generate long-term capital appreciation for investors from a portfolio of equity and equity related securities based on the momentum theme. There is no assurance that the investment objective of the scheme will be achieved.
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Highlights:
- Benchmark: NIFTY 500 TRI
- Fund Managers: Karthik Kumar and Mayank Hyanki
- NFO open date: 22nd November 2024
- NFO close date: 06th December 2024
- Minimum Application Amount: Rs. 100 and in multiples of Rs. 1/- thereafter
- Exit Load:
- If redeemed / switched out within 12 months from the date of allotment - For 10% of the investment: Nil, For remaining investments: 1%
- If redeemed/switched out after 12 months from the date of allotment: Nil
"India’s evolving economy presents distinct opportunities for those who can effectively leverage market trends. Momentum investing, a strategy widely embraced globally, is especially relevant in the Indian context, where rapid sectoral shifts and evolving market dynamics create pockets of sustained outperformance. Our launch of the Axis Momentum Fund aligns with our commitment to continuously innovate and offer investors access to cutting-edge investment strategies that align with evolving market dynamics," said B Gopkumar, MD & CEO, of Axis Mutual Fund.
The Axis Momentum Fund offers a unique model-driven approach, systematically identifying and investing in high-momentum securities across sectors. The fund employs a framework that filters securities by considering data availability and liquidity, and then evaluates them based on price momentum trends. Essentially, the portfolio construction uses an optimized process that utilizes Composite Rank, Risk of the Stock, and Portfolio Constraints.
The fund utilizes an optimization process that evaluates stocks for strong price momentum while integrating risk metrics to balance exposure. "This model based approach combines momentum scoring with volatility measures, optimizing position sizes to achieve both performance and risk control. The fund's model has consistently proven its effectiveness across market cycles, outperforming the NIFTY 500 TRI benchmark in 12 out of 15 years with a cumulative outperformance of 6.62%. On a 3-year rolling return basis, the model has delivered positive returns 96% of the time and outperformed the benchmark in 76.8% of instances," the company said in a statement.
“Momentum investing, while offering return potential, requires a disciplined and data-driven approach to manage risk effectively. The Momentum Fund employs a robust risk management framework that combines quantitative screens, advanced technical indicators, and rigorous fundamental analysis to identify high-conviction opportunities. Our portfolio construction process focuses on sector diversification to mitigate systemic risks, while maintaining a strict risk-to-reward ratio for each position. We have designed this fund to serve as both a standalone investment vehicle and a powerful portfolio diversification tool, particularly valuable in today's market where sector leadership and growth drivers are constantly evolving," said Ashish Gupta, CIO, Axis Mutual Fund.
Key Features of the Axis Momentum Fund
- Potential for Higher Returns: Leverages momentum investing to capture stocks with strong upward price trends, aiming for superior long-term returns.
- Agile Re-adjustments and Rebalancing: A dynamic, model-based approach ensures regular portfolio rebalancing, enabling the fund to seize emerging opportunities in the market
- Controls Exposure to Sector/Stock Concentration, Market Cap Skewness, and Liquidity Risk: The fund’s risk management framework maintains a balanced portfolio, reducing over-concentration and addressing liquidity constraints.
- Complements Other Strategies, Enhancing Portfolio Potential: Designed to complement other strategies, enhancing portfolio performance by integrating a disciplined momentum strategy.
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