Max Life Nifty 500 Momentum 50 Index Fund

As already mentioned, the Nifty Momentum Quality Index Fund will track the performance of the Nifty 500 Momentum Quality 50 Index within the margins of tracking error. As a result, the stocks featured in the portfolio of this scheme will feature the same composition and weight as the NSE index that is being tracked.

So, some key features of the stocks that this fund will invest in, include:

The momentum investing strategy is an investment approach that seeks to select and invest in stocks that have recently witnessed an increase in prices. The strategy is based on the premise that the price of such stocks will be driven upwards based on the momentum of increased investor interest.

Once the investor has identified and purchased such high momentum stocks, they are typically held till the momentum weakens in the future. At that point, the stocks with weakening momentum are sold at a profit.

A number of indices in India currently track the performance of stocks that have high momentum scores. These include the Nifty Midcap 150 Momentum 50 Index and the Nifty 500 Momentum 50 Index. The newly launched Max Life Nifty 500 Momentum 50 Index Fund would replicate the constituents and performance of the Nifty 500 Momentum 50 Index within the margins of tracking error.

The following is a quick snapshot of the Max Life Nifty 500 Momentum 50 Index Fund, highlighting its key features:

The Max Life Nifty 500 Momentum 50 Index Fund would feature a flexicap approach by replicating the Nifty 500 Momentum 50 Index. This is because the 50 constituent stocks featured in this Index are drawn from the broad-based Nifty 500 Index.

The Nifty 500 Index comprises 100 large cap stocks along with 150 midcap stocks and 250 small cap stocks. Additionally, since normalised momentum score is a sector-agnostic selection criterion, the scheme offers diversification across sectors.

The combination of flexi-cap asset allocation along with momentum investing approach in a single investment has the potential to diversify the investment portfolio and provide high returns in the long term. This diversification across market caps and sectors would also help reduce the overall investment risk by safeguarding investors from cyclical performance of markets.

The Max Life Nifty 500 Momentum 50 Index would be the second momentum strategy-based fund launched by Axis Max Life Insurance after the midcap oriented Max Life Midcap Momentum Index Fund (launched in January 2024). The new launch further expands the portfolio of Index Funds launched by Axis Max Life Insurance in the past, such as, Max Life Smallcap Quality Index Fund (launched August 2023) and Max Life Nifty Alpha 50 Index Fund (launched May 2024).  

The Max Life Nifty 500 Momentum 50 Fund would replicate the composition and weight of the basket of 50 equity stocks featured on the Nifty 500 Momentum 50 Index. The goal of this index fund would be to mimic the performance of the index as closely as possible within the margins of applicable tracking error.

As mentioned in the previous section, the Max Life Nifty 500 Momentum 50 Fund comprises the top 50 NSE stocks selected on the basis of their normalised momentum score. The scheme itself will be passively managed, so it will mimic the weightage of Nifty 500 Momentum 50 Index. The top 10 constituents of the index and by the new are tabulated below, along with their individual weights as of 28 June 2024:

Since the Max Life Nifty 500 Momentum 50 Fund is a new fund, there is no returns data for this specific fund as of yet. However, since the aim of the fund is to mirror the index and generate comparable returns within the margins of tracking error, the returns of the Nifty 500 Momentum 50 Index can serve as suitable starting point.

Below are the historical absolute and CAGR returns of the Nifty 500 Momentum 50 Index over different time periods versus the parent Nifty 500 Index:

Some of the key reasons to consider investing in this index fund via the Unit Linked Insurance Plan route include:

Those who want to invest in the Max Life Nifty 500 Momentum 50 Index Fund can do so through the ULIP offerings currently available with Axis Max Life Insurance. So, investors will also get life insurance benefit by investing in this fund through Axis Max Life ULIP Plans.

Other than the newly launched Max Life Nifty 500 Momentum 50 Fund, Axis Max Life Insurance has introduced 3 other index funds based on smart beta indices. These are Nifty Small Cap Quality Index Fund, Midcap Momentum Index Fund and Nifty Alpha 50 Fund in August'23, January'24, and May'24 respectively.

In the case of the MLI Nifty Small Cap Quality Fund, the focus is on the top 50 high quality stocks of small cap companies that are part of the Nifty Smallcap 250 Index. On the other hand, the Max Life Nifty Midcap Momentum Fund focuses on 50 stocks (selected on the basis of their momentum score) of mid-cap companies from the larger pool of Nifty Midcap 150 Index. The Nifty Alpha 50 Fund invests in stocks with the highest Jensen's Alpha scores.

The first two funds focus on stocks belonging to a single type of market capitalisation only, i.e. small cap and mid cap, respectively. Whereas, in the case of Max Life Nifty Alpha 50 Fund, the high alpha stocks are drawn from stocks of different market capitalization that offer a more diversified flexicap approach to passive investing.

Similarly, the Nifty 500 Momentum 50 Fund also features a flexicap approach allowing investors to diversify their investments across different market capitalisations while incorporating the potentially high growth momentum investment strategy.