Business News Desk, Nippon India Mutual Fund has launched an index fund. Its name is Nifty 500 Momentum 50 Index Fund. This fund will invest in those stocks which show strong signs of growth. Investment in this New Fund Offer (NFO) can be made till September 25. After that, the units of this scheme can be bought and sold at any time.
This fund will invest in momentum stocks
Nippon India Nifty 500 Momentum 50 Index Fund is a passively managed scheme. It will track the Nifty 500 Momentum 50 Total Return Index (TRI). Its primary objective is to invest in momentum stocks. This means that this scheme will invest in the shares of companies whose prices have shown a sharp rise. Nippon India Mutual Fund has said that this fund gives investors an opportunity to invest in 50 high-momentum stocks of Nifty 500.
Good for portfolio diversification
This fund is good for diversification of investors’ portfolio. The strategy of investing in momentum stocks is helpful in getting high returns. But, it shows more volatility. Since it is a passively managed index fund, its expense ratio is lower than that of an actively managed fund. Therefore, it gives investors an opportunity to invest in stocks at a lower cost.
Minimum investment: Rs 1,000
One can invest a minimum of Rs 1,000 in this fund. People with less income than this can also invest in this fund. This fund also has the option of systematic investment like SIP and SWP. This gives the investor an opportunity to easily invest for the long term. Experts say that investing in a mutual fund scheme for a long period gives good returns.
Should you invest in this fund?
If you want to invest in this fund, it would be better to first understand its risk profile. There is a lot of risk in investing in it. Momentum stocks perform well in bullish markets but their performance is poor in volatile or bearish markets. You should invest in this fund only if you are willing to take more risk for high returns. Secondly, you will get good returns only if you invest in this fund for a long period. Investors who cannot take much risk and want stable returns should not invest in this fund.
