The newly launched NFO-Bandhan Nifty 500 Momentum 50 Index Fund is an open-ended scheme that tracks the Nifty 500 Momentum 50 Index, which consists of stocks demonstrating high momentum in the market. Momentum investing seeks to capture opportunities in stocks currently trending upwards, making this fund an exciting prospect for long-term investors looking for high returns from equity investments.
Let’s take a closer look at the NFO’s key details and why it could be a valuable addition to your portfolio.
Details of Bandhan Nifty 500 Momentum 50 Index Fund
The Bandhan Nifty 500 Momentum 50 Index Fund NFO is designed to replicate the performance of the Nifty 500 Momentum 50 Index by investing in stocks in the same proportion as the index.
The Nifty 500 Momentum 50 Index selects the top 50 companies from the Nifty 500 based on their price momentum, making this fund a good choice for investors who want to capture gains from stocks that are currently showing the best price performance.
Investment Objective of the Fund
The investment objective of the scheme is to replicate the Nifty 500 Momentum 50 Index by investing in its constituent stocks in the same proportion. The fund aims to provide returns that closely track the total return of the Nifty 500 Momentum 50 Index, subject to tracking errors.
Key Details of Bandhan Nifty 500 Momentum 50 Index Fund:
Portfolio Allocation
The Bandhan Nifty 500 Momentum 50 Index Fund NFO will predominantly invest in equity stocks that are part of the Nifty 500 Momentum 50 Index. These are companies showing strong price momentum, indicating current market strength.
Here’s a simplified allocation of the fund’s portfolio:
This allocation ensures the fund’s focus remains on stocks with high price momentum while maintaining some flexibility for liquidity management.
Understanding Risks and Returns
The Bandhan Nifty 500 Momentum 50 Index Fund NFO targets investors with a high-risk tolerance. Momentum stocks, though capable of delivering high returns, can also experience volatility.
As such, investors should be prepared for price fluctuations, especially over the short term.
The Nifty 500 Momentum 50 Index has delivered returns of 64.49%, 26.44%, and 35.10% in the past 1 year, 3 years, and 5 years respectively.
Since it is the fund’s benchmark, the goal is to meet or exceed the above-delivered returns.
Historically, momentum strategies have proven successful during certain market conditions, but they may underperform in sideways or declining markets.
Investors should consider a long-term investment horizon to mitigate these risks and maximise potential gains.
Bandhan Mutual Fund
Founded in 2000, Bandhan Mutual Fund is now one of the top 10 fund houses in India by Assets Under Management (AUM). With a talented investment team spread across more than 60 cities, Bandhan Mutual Fund aims to help people grow their savings through smart investment strategies.
Originally known as IDFC Mutual Fund under its parent company IDFC Ltd., it played a significant role in developing India’s Mutual Fund industry. As of June 30, 2024, the company’s AUM reached ₹148,741.98 crore.
Fund Management Team
The fund will be managed by Mr. Nemish Sheth, who brings years of experience in equity management to the table. Mr. Nemish Sheth, 37, is an Associate Vice President in Equity at Bandhan AMC, joining the team in November 2021.
With 12 years of experience, he manages several funds, including the Bandhan Nifty 100 Index Fund and the Bandhan Arbitrage Fund, and previously worked at Nippon Life India Asset Management and ICICI Prudential.
Who Should Invest in this NFO Fund?
The Bandhan Nifty 500 Momentum 50 Index Fund NFO is suitable for:
- Investors are looking to capture gains from stocks that are currently demonstrating strong price momentum.
- Individuals with a long-term investment horizon of 3-5 years or more.
- Those with a high-risk tolerance who are comfortable with short-term market fluctuations.
- Investors seeking to diversify their equity portfolio with a momentum-based strategy.
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