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Tata AIA Life Insurance has launched a new investment option called the Midcap Momentum Index Fund. This fund aims to invest in high-growth mid-sized companies in India. It tracks a specific list of the top 50 such companies (based on their recent performance) within a larger group of 150 mid-sized companies.
The New Fund Offering (NFO) window will remain open until June 15 at a NAV of Rs. 10 per unit.
What is the Midcap Momentun Index Fund?
The Midcap Momentum Index Fund will mirror the Nifty Midcap 150 Momentum 50 index. This index tracks the performance of the top 50 high growth companies within the Nifty Midcap 150, selected based on their Normalized Momentum Score, offering investors a chance to benefit from high-growth midcap stocks.
The Midcap Momentum Index Fund will mirror the Nifty Midcap 150 Momentum 50 index. This index tracks the performance of the top 50 high growth companies within the Nifty Midcap 150, selected based on their Normalized Momentum Score, offering investors a chance to benefit from high-growth midcap stocks.
The score reflects the momentum investing strategy, which is based on choosing stocks that have demonstrated strong performance in the recent past and expecting this upward trend to continue.
Fund Composition: 80%-100% in equity and equity-related instruments, 0%-20% in cash, and money market securities.
Fund Management Charges: This is the annual fee that the fund charges to manage your investment. Here, it's 1.20% of your total investment amount per year.
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Risk Profile: This indicates how volatile the investment is. "High" risk means the fund's value has the potential to fluctuate significantly, with chances of high returns but also high potential losses.
How does momentum investing work?
Momentum reflects a pattern of the top-performing stocks continuing to deliver high performance over the near future. Investors buy stocks when the trend shows upward performance and stay invested as long as the trend remains positive, selling at a higher price before the trend goes downward.
With respect to the Nifty Midcap 150 Momentum 50 Index, the momentum score is calculated based on price return and its standard deviation and the top 50 stocks are selected. Finally, the portfolio is created depending on the weight allocation diversified across different sectors.
Why is it interesting?
Growth Potential: India's economy is expected to grow significantly in the coming years, and mid-sized companies are well-positioned to benefit from this.
Diversification: The fund invests in a variety of companies, which helps spread out the risk.
Long-Term Investment: This fund is designed for those looking to invest for the long term (several years) to potentially see good returns.
Who can invest?
Existing Tata AIA Life Insurance policyholders can invest in this fund through their existing plans or through new plans that offer this option.
Key Takeaway:
This new fund from Tata AIA Life Insurance provides an opportunity for policyholders to invest in potentially high-growth companies while still having the security of life insurance coverage.
" The Midcap momentum index has grown 11x in the last 9 years, demonstrating the robust growth of India's midcap sector. With the Midcap Momentum Index Fund, we aim to provide our investors with an attractive proposition to capitalize on this dynamic sector powered by India’s growth story. India is well into its Amrit Kaal, driven by robust growth in manufacturing and services sector, rising consumption demand, financialization of saving etc," said Harshad Patil, Executive Vice President, and Chief Investment Officer (CIO) of Tata AIA.
How to invest?
Tata AIA policyholders can invest in this fund through the company’s ULIP offerings, including Fortune Pro, Wealth Pro, Fortune Maxima, and more. They can also invest in the fund through ILP solutions like Param Rakshak Plus and Pro-Fit, which offer multiple benefits across health, wellness, and life cover.
