Nov 19, 2022 | Reading Time : Approx. 13 min
Listen to Edelweiss Nifty Midcap150 Momentum 50 Index Fund: Should You Invest in Momentum Factor?
Momentum factor-based investing has attracted investor sentiment in recent years. The momentum strategy has generated returns higher than broader indices and at times, the outperformance has been significant. Unlike the prevailing buy-low-sell-high canon, momentum factor-based investing takes the opposite approach. It is based on the premise that stocks doing well have momentum and hence, will continue to do well in the near term. Therefore, momentum investing seeks to ride the current wave (or momentum) of performing stocks and then, jump on to the next wave before the first one slows down.
However, given the current market conditions, mid-cap and small-cap stocks have significantly dropped in price and are available at lower valuations. Many investors consider it a good entry point to diversify their portfolio in mid-cap and small-cap funds. Future market leaders or large caps are thought to be coming from mid-cap companies. For investors that can handle the high risk and are looking for a low-cost passive solution for their mid-cap portfolio, investing in the mid-cap market through passive funds is a great alternative. Midcap funds that are passively managed have similar returns to actively managed midcap funds while carrying less risk.
Investors could consider investing in the Nifty Midcap150 Momentum 50 Index. The top seven sectors with the highest exposure…
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