UTI AMC has launched the country's first momentum-based passively managed fund, based on the Nifty 200 index.
UTI, which manages seven equity ETF funds with an AUM of around Rs 44,000 crore, making it the second-largest such equity fund in the country, said the new fund will be based on the 30 best performing stocks from the Nifty 200 index.
Sharwan Kumar Goyal, the fund manager of the scheme, said the new fund was opened on Thursday to good investor response but was quick to add that AMC has not set any internal targets in terms of AUM or folios.
Since it a passively managed fund and a new concept as the fund is benchmarked and based on the smart beta fund, we have not set any target for sales or AUM, he told PTI.
With the Nifty200 momentum 30 index fund we are introducing a smart-beta or factor-based strategy. Globally it is learnt that momentum strategy performs well in the long term and momentum investing is a well accepted investment style.
Currently, this investing mode is available through alternative investment vehicles and UTI is first to launch the same under index fund route in the country.
The 30 best performing stocks which have derivative offerings will be picked up based on their performance in the past six months which would keep changing when the index is revalued every six month, Kumar said.
Picking stocks with derivative options minimises the cost of ownership for the fund, he explained.
The new open-ended index fund which replicates/trackes the Nifty 200 momentum 30 index called UTI Nifty200 momentum 30 index fund', was opened for subscription on February 18 and will be closed on March 04. The scheme will re-open for subscription and redemption on an ongoing basis from March 12.
The investment objective of the scheme is to provide returns that closely correspond to the total returns of the securities as represented by the underlying index, subject to tracking error, and without any guarantee of delivering the investment objective, Kumar said.
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