Bangalore, 28 February, 2025 – Momentum investing has gained strong traction, driven by the growing interest in factor-based index funds. The National Stock Exchange (NSE) now offers 31 factor-based indices, reflecting the rising demand from mutual funds.
Factor investing relies on persistent return drivers such as momentum, low volatility, and value, enabling investors to gain exposure to stocks with specific characteristics that historically influence returns. The Nifty Midcap 150 Momentum 50 index, for instance, tracks the top 50 stocks from the Nifty Midcap 150 index selected based on their Normalized Momentum Score.
Over the past four months, the market has experienced corrections and remained volatile. Most major indices have posted negative returns during this period, erasing all year-to-date gains. Despite this sustained market turbulence, index funds tracking the Nifty Midcap 150 Momentum 50 index have continued to attract inflows.
The Tata Nifty Midcap 150 Momentum 50 index fund is one such fund underscoring the rising traction of momentum investing. In 2024, inflows into this fund through digital and direct channels tripled year-on-year to ~Rs 500 crore from 199 cities. In Delhi, inflows surged to over ~Rs 27 crore in 2024, a sharp rise from ~Rs 1.25 crore in 2023, while new PAN registrations in the fund jumped to 169 from just 15. Similar strong inflows and new investor participation were observed in Kolkata, Bengaluru, and Chennai. (Source: Internal Data)
“Momentum investing allows investors to capitalise on strong price trends while eliminating emotional bias. The Tata Nifty Midcap 150 Momentum 50 Index Fund provides a disciplined approach to factor investing, balancing risk and reward. Given its track record and the historical resilience of midcap stocks, investors may consider allocating a portion of their portfolio to this strategy for potential long-term gains,” said Anand Vardarajan, head of passive investment at Tata Asset Management.
Mr. Kapil Menon manages the Tata Nifty Midcap 150 Momentum 50 index fund, which was launched in October 2022.
With the increasing adoption of factor investing and the momentum-based strategies, the Tata Nifty Midcap 150 Momentum 50 Index Fund stands as an option for investors seeking to enhance portfolio diversification.