Introduction
Nippon Life India Asset Management Limited (NAM India), the asset manager of Nippon India Mutual Fund (NIMF), has announced the launch of Nippon India Active Momentum Fund, an open-ended equity scheme designed to generate long-term capital appreciation. The fund aims to leverage a combination of price momentum and earnings revisions to optimize investment returns. Additionally, it integrates minimum volatility and beta factors to mitigate risks during market downturns and enhance gains during uptrends.
The New Fund Offer (NFO) opens on February 10, 2025, and closes on February 24, 2025. Investors can participate with a minimum investment of ₹500, followed by investments in multiples of ₹1 thereafter. The benchmark for the fund is Nifty 500 TRI.
Key Features of Nippon India Active Momentum Fund
1. Unique Investment Strategy: Momentum & Earnings Momentum Integration
The core strategy of the fund integrates two critical elements:
- Price Momentum – Stocks with strong price trends over time.
- Earnings Momentum – Stocks with positive earnings revisions based on expert forecasts.
By combining these technical and fundamental factors, the fund seeks to capture growth opportunities while mitigating downside risks.
2. Quality Momentum Identification
The fund differentiates between high-quality and low-quality momentum stocks by analyzing:
- Volatility factors to identify stable trends.
- Sentiment analysis to assess market confidence in specific stocks.
This approach helps navigate market fluctuations more effectively and ensures smarter stock selection.
3. Data-Driven Factor Combination
The fund utilizes multiple key factors to enhance decision-making, including:
- Price momentum – Stocks exhibiting strong performance trends.
- Consensus view – Market expert opinions on stock potential.
- Sentiment analysis – Investor behavior and reaction to news.
- Beta & minimum volatility – Balancing risk during different market phases.
4. Risk-On/Risk-Off Framework for Market Adaptability
The fund follows a dynamic market adaptation strategy, adjusting investments based on market trends:
- Risk ON Phases – The fund increases exposure to high-beta stocks, aiming for higher returns during market uptrends.
- Risk OFF Phases – The fund emphasizes minimum volatility stocks to reduce portfolio risk during downturns.
This approach ensures better risk-adjusted returns over time.
5. Dynamic Rebalancing for Market Shifts
The portfolio will be rebalanced on a monthly basis to:
- Adapt to changing market conditions.
- Adjust exposure to momentum stocks based on risk levels.
- Ensure optimal stock selection for sustained growth.
Expert Insights on the Fund Launch
Saugata Chatterjee, Chief Business Officer, Nippon India Mutual Fund, highlighted the unique positioning of the new fund, stating:
“The Nippon India Active Momentum Fund brings a differentiated offering to the market by harnessing the alpha potential of momentum along with risk mitigation factors to reduce volatility and improve the investment experience.”
This fund aims to provide investors with a dynamic strategy that not only benefits from market momentum but also ensures a stable and risk-mitigated investment experience.
Investment Details & Benchmark
- Fund Name: Nippon India Active Momentum Fund
- Fund Type: Open-ended equity scheme
- Investment Objective: Long-term capital appreciation through price momentum and earnings momentum.
- NFO Period: February 10, 2025 – February 24, 2025
- Minimum Investment: ₹500 (and multiples of ₹1 thereafter)
- Benchmark Index: Nifty 500 TRI
Conclusion
The Nippon India Active Momentum Fund introduces an innovative strategy in the Indian mutual fund market by combining technical market trends with fundamental earnings analysis. Its data-driven approach, risk-adjusted framework, and dynamic rebalancing make it an attractive option for investors seeking long-term capital growth with controlled risk exposure. As market conditions evolve, this fund aims to optimize returns while managing volatility effectively, making it a promising choice in India’s investment landscape.