Choice of momentum factor index should depend on performance in downturns

An index with less volatility during downturns can help you remain invested

Momentum investing is gaining in popularity, with asset management companies (AMCs) now offering various such index funds. A new Nifty 500 Momentum 50 index fund was launched recently, adding to the existing Nifty 200 Momentum 30 and Nifty Midcap 150 Momentum 50 funds. The success of these funds underscores AMCs’ confidence in momentum products.

 

Why momentum investing?

 

Momentum investors believe that stocks with recent price gains are likely to continue rising. This approach contrasts with the conventional “buy low, sell high” strategies. Momentum investing instead advocates “buy high, sell higher”. In a momentum index, stocks are selected based on recent