Nifty 200 Momentum 30 Index and An ETF that tracks High Momentum Stocks

Most of us try to chase the returns in the stock markets; during this process, we search for the best ways to invest in momentum stocks and finally arrive at a strategy that suits our way of entering a trade; what if NSE tells us the stocks in an uptrend and follows an apt methodology in selecting stocks and rebalance them every 6 months. Yes, there is an index from the National Stock Exchange that gives the 30 best stocks based on momentum score from a basket of Nifty 200, i.e., the Nifty 200 Momentum 30 Index.

Introduction to Nifty 200 Momentum 30 Index

Nifty 200 Momentum 30 Index tracks the performance of the top 30 companies with high Normalized Momentum Score from the Nifty 200 Stocks. The Normalized Momentum Score is determined based on its 6-month and 12-month price return, adjusted for volatility. The weightage of the stocks in the portfolio depends upon the Normalised Momentum Score and its free-float market capitalization and follows a tilt weighted methodology.

Asset allocation and Rebalancing:

The Nifty 200 Momentum Index 30 is rebalanced every 6 months, and the current weightage of the stocks and sectors of the Nifty 200 Momentum 30 Index are as follows:

Risk - Return Performance of Nifty 200 Momentum 30 Index:

The risk and return parameters of the Nifty 200 Momentum 30 Index when compared with the Nifty 50 and Nifty 250 indices, are as follows:

As per the above data, the Nifty 200 Momentum 30 Index outperformed the Nifty 250 and Nifty 50. The main reason for this outperformance is its aggressive investment style, thereby inviting sharp drops and sharp recoveries in the portfolio.

However, the portfolio is built with a robust methodology that has proven its efficiency by outperforming the benchmark in the long run through different market cycles.

Now, we know an Index that invests in top momentum stocks, but do we have to invest individually in each stock? The answer is No. There is an ETF that tracks this index, i.e., UTI Nifty 200 Momentum 30 Index Fund.

About UTI Nifty 200 Momentum 30 Index Fund

UTI Nifty 200 Momentum 30 Index Fund, launched in March 2021, is an open-ended Exchange Traded Fund that inherits all of the Nifty 200 Momentum 30 Index characteristics. This fund is managed by Mr. Sharwan Kumar Goyal, with an experience of about 15 years in fund management.

We can transact in this fund directly through your Demat account; details regarding the minimum investment amount and expense ratio are as follows:

Conclusion:

Though the fund is passively managed, the investment is for aggressive investors looking to invest in a portfolio with the ability to generate higher returns and accept higher volatility.

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