Exploring Investment Opportunities with Axis Momentum Fund

Axis Momentum Fund offers an actively-managed way to invest in equities using momentum as a strategy. Momentum investing is a time-proven investment strategy that works across asset classes and across geographies. It relies on the higher likelihood that a stock generating positive returns will continue to generate positive returns.

The fund takes various momentum indicators into consideration while also taking risk and portfolio-level constraints into account. For example, the fund will ensure that all the securities that it invests in have enough liquidity and the portfolio is not too concentrated in any particular sector or market cap.

Let’s dive into the various features of momentum investing.

Momentum Adapts to Different Styles
Many investors look for an investing strategy that can properly adapt to changing market cycles. Momentum investing is based on the price action of securities in the recent past, hence, it can quickly adjust once the price trend of a security changes. This allows momentum to adapt to various cycles in the market.

During phases when quality stocks are performing well, momentum investing builds a higher correlation with quality stocks. Similarly, during phases when value stocks are performing well, momentum investing builds a higher correlation with value stocks.

Momentum Adapts to Different Market Caps#
During bullish markets, small-cap and mid-cap stocks are expected to perform better. In contrast, during bearish markets, large-cap stocks are expected to fall slower. Investors who want to adopt an investing strategy that can adapt to both kinds of market cycles can consider the momentum investing approach.

Similar to how momentum can adapt to different styles, it can also adapt to different market caps. When large-cap stocks perform well, they provide positive price signals, and momentum builds a stronger correlation with large-cap stocks. During phases when mid-cap and small-cap stocks perform well, momentum switches to the stocks that are delivering better returns in these categories.

Momentum Need Not Underperform During Negative Market Phases
Many investors hold the notion that momentum underperforms during negative market phases. In past, momentum has outperformed broader market indices even during negative market phases (by delivering less negative returns). However the performance depends upon the prevailing market conditions.

NSE Indices, Data from Jun 2020 to Jun-2024.

Wrapping Up
Momentum can be an effective strategy to add to your portfolio. Axis Momentum Fund can work well as a complement to other funds that you may have in your holdings. The fund uses a model-based approach with periodic rebalancing to ensure a systemized and disciplined approach to investing.

#Large Cap:1st-100th company in terms of full market capitalization.
Mid Cap:101st-250th company in terms of full market capitalization.
Small Cap:251st company onwards in terms of full market capitalization.

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.
This document 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.

Statutory Details: Axis Mutual Fund has been established as a Trust under the Indian Trusts Act, 1882, sponsored by Axis Bank Ltd. (liability restricted to Rs. 1 Lakh). Trustee: Axis Mutual Fund Trustee Ltd. Investment Manager: Axis Asset Management Co. Ltd. (the AMC). Risk Factors: Axis Bank Limited is not liable or responsible for any loss or shortfall resulting from the operation of the scheme.

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