Grow Mutual Fund has introduced the Grow Nifty 500 Momentum Fund, an open-ended exchange-traded fund (ETF). This fund will track the Nifty 500 Momentum 50 Index.
The New Fund Offer (NFO) will be open for subscription from April 3 to April 17, 2025. Investors can start with a minimum investment of ₹500 during this period.
After the NFO closes, the fund will be available for buying and selling in the stock market from May 5, 2025.
The fund will be managed by Nikhil Satam.
How Does the Momentum Investment Strategy Work?
Momentum investing focuses on buying stocks that are already rising and holding them as long as the uptrend continues. When stock prices start showing signs of decline, they are quickly sold.
This strategy relies on price trends rather than a company’s fundamental value. The belief is that stocks that are rising can continue to rise further in the short to medium term.
How Are Stocks Selected for This Index?
The Nifty 500 Momentum 50 Index picks 50 high-performing stocks from the Nifty 500.
These stocks are chosen based on their 6-month and 12-month price returns, considering their price volatility.
To keep the index updated, the stock list is revised every six months, ensuring that only the fastest-growing stocks are included based on market conditions.
Who Should Invest in This ETF?
Momentum investing has historically outperformed major indices like Nifty 50 and Nifty 500, particularly during market recovery phases.
Data shows that in 70% of such cases, momentum strategies have provided strong returns.
While this approach can offer good returns in the long term, it is also a high-risk strategy. Stock prices can change quickly, and trends can reverse suddenly.
Investors should carefully consider their risk tolerance before investing in this ETF.
