All You Need to Know About Axis Nifty500 Momentum 50 Index Fund

Index funds are becoming increasingly popular with mutual fund investors. Index funds are a type of passive funds, which aim to mimic the performance of an index. The surging interest for passive funds among Indian investors can be seen from the fact that in 2024 alone, the assets under management (AUM) of passive funds increased by 24%. . In passive funds, fund managers do not make active investment decisions. Some primary advantages of passive funds include elimination of human bias, relatively low cost, and diversification.

Among the plethora of options, it can be hard to choose the right passive fund for your needs. Many different types of index funds are available with different value propositions.

One such sub-category can be index funds based on factors like value and momentum.

What is Factor Investing?

Factor investing is based on the premise that stocks demonstrating certain characteristics have a higher chance of delivering returns. These characteristics or factors are momentum, value, quality, size, and volatility. Investors can choose to create portfolios that have stocks that complement each other by balancing the various factors.

What is Momentum Investing?

Momentum investing involves investing in stocks with a positive price trend. It is believed that stocks that are on a rising trend or having positive “momentum”, are likely to continue rising. Momentum is especially attractive as a complement to several kinds of stock portfolios as it does not follow fundamentals but simply price trends, offering diversification in terms of strategy.

How to access the momentum strategy?

Picking momentum stocks requires experience, active research, and knowledge. An easy way to access the momentum strategy is with Axis Nifty500 Momentum 50 Index Fund – which allows investors to passively invest in momentum stocks with ease.

What is Axis Nifty500 Momentum 50 Index Fund?

Axis Nifty500 Momentum 50 Index Fund is an open-ended index fund that provides exposure to India’s top 50 “momentum” stocks regardless of size and sector.

Axis Nifty500 Momentum 50 Index Fund tracks the performance of the Nifty500 Momentum 50 Index. The momentum index takes into consideration the relative risk-adjusted performance of each stock over recent history. This can range from the past 6 months to the past 12 months or so.

The index has a defined methodology. It chooses stocks from the Nifty 500 index and assigns a “momentum score” to each stock. The top 50 stocks with the highest score are added to the index. Stocks are screened based on size and liquidity.

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Why Choose Axis Nifty500 Momentum 50 Index Fund?

There are several reasons why an investor might consider investing in the Axis Nifty500 Momentum 50 Index Fund:

• Outperformed the Nifty 500 – The Nifty500 Momentum 50 Index has outperformed the Nifty 500 between 1st April 2005 to 31st December 2024. While the Nifty 500 delivered 15.1x returns, the Nifty500 Momentum 50 Index managed to deliver 68.9x returns over the same period. However, investors should note that past performance does not guarantee future returns.

• A good complement to other strategies – Momentum investing can work well as a part of a balanced portfolio. It can complement other factors such as value investing or quality investing.

• Passive investing advantage – This fund eliminates selection bias, while offering easy and affordable access to the top 50 momentum stocks.

Conclusion

Overall, Axis Nifty500 Momentum 50 Index Fund may be a suitable choice for investors who are looking to gain exposure to momentum stocks in a cost-efficient manner. The fund can provide diversification to an investor’s portfolio and can serve as an effective complement to other strategies.

Axis Nifty500 Momentum 50 Index Fund is not sponsored, endorsed, sold or promoted by NSE Indices Limited (formerly known as India Index Services & Products Limited (IISL)). NSE Indices Limited does not make any representation or warranty, express or implied (including warranties of merchantability or fitness for particular purpose or use) and disclaims all liability to the owners of Axis Nifty500 Momentum 50 Index Fund or any member of the public regarding the advisability of investing in securities generally or in the Axis Nifty500 Momentum 50 Index Fund linked to Nifty500 Momentum 50 TRI or particularly in the ability of the Nifty500 Momentum 50 TRI to track general stock market performance in India. Please read the full Disclaimers in relation to the Nifty500 Momentum 50 TRI in the in the Offer Document/ Prospectus/ Scheme Information Document.

Investors are requested to consult their financial, tax and other advisors before taking any investment decision(s).

Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.

This article represents the views of Axis Asset Management Co. Ltd. and must not be taken as the basis for an investment decision. Neither Axis Mutual Fund, Axis Mutual Fund Trustee Limited nor Axis Asset Management Company Limited, its Directors or associates shall be liable for any damages including lost revenue or lost profits that may arise from the use of the information contained herein. No representation or warranty is made as to the accuracy, completeness or fairness of the information and opinions contained herein. The AMC reserves the right to make modifications and alterations to this statement as may be required from time to time.

Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.