Tata Mutual Fund launches Nifty Midcap 150 Momentum 50 Index Scheme

The New Fund Offer (NFO) for the fund opened on October 4 and will close on October 17.

Tata Nifty Midcap 150 Momentum 50 Index Fund aims to provide before expense returns commensurate with the performance of Nifty Midcap 150 Momentum 50 Index (TRI) subject to tracking error.

The fund will invest with 95%-100% allocation in securities covered by Nifty Midcap 150 Momentum 50 Index, 5% allocation in debt and money market instruments and will be benchmarked against Nifty Midcap 150 Momentum 50 Index (TRI).

Shailesh Jain, Fund Manager, Tata Asset Management, said, “The momentum strategy takes into account the past price performance of the stock over a specified period. We believe that the outperformance of a stock tends to gain a lot around the stock, so once the trend is well established, it is likely to continue. A carefully crafted investment strategy can provide the confidence needed to continue trading across all time frames of the market. Our cost-effective offering through index funds creates an opportunity for long-term equity investors.”

If redeemed on or before 90 days from the date of allotment, the exit load is 0.25% of the applicable net asset value. Minimum subscription amount is 5,000 per application and thereafter in multiples of Rs. The minimum application amount is also applicable for switch-in.

Anand Varadarajan, Business Head-Banking, Alternative Products and Product Strategy said, “Over the past 5 and 10 years, many mid-cap stocks have turned into multi-baggers. However, the midcap segment exhibits a large spread of returns, creating the need for a filter to select potential outperformers. This is where speed investing comes in. Simple physics definition of motion: speed = mass * velocity. In fund parlance, this would be the stock weight * price performance adjusted for volatility. Midcap combined with momentum as a filter has shown remarkable results and that is what we want to reiterate here. This can be a great addition to take advantage of the opportunity in the midcap space in a different view of looking at momentum as a factor of selection. We look at price performance over the past 6 and 12 months adjusted for volatility and free float (liquidity) to arrive at the momentum.”