AXIS Nifty500 Momentum 50 Index Fund - Direct (G): NFO Details

resr 5paisa Research Team

Last Updated: 21st January 2025 - 05:25 pm

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The AXIS Nifty500 Momentum 50 Index Fund - Direct (G) is an open-ended mutual fund scheme offered by Axis Mutual Fund. It aims to replicate the performance of the Nifty500 Momentum 50 Total Return Index (TRI), providing investors with exposure to 50 stocks selected from the Nifty 500 based on their normalized momentum scores.

Details of the NFO: AXIS Nifty500 Momentum 50 Index Fund - Direct (G)

NFO Details Description
Fund Name AXIS Nifty500 Momentum 50 Index Fund - Direct (G) 
Fund Type Open Ended
Category Equity - Index
NFO Open Date 24-January-2025
NFO End Date 07-February-2025
Minimum Investment Amt ₹100/-  and in multiples of ₹1 thereafter
Entry Load NIL
Exit  Load

a)  If redeemed/ switched out within 15 days from the date of allotment: 0.25%  

b)  if redeemed/ switched out after 15 days from the date of allotment: Nil

Fund Manager Mr. Karthik Kumar and Mr.  Sachin Relekar
Benchmark Nifty500 Momentum 50 Index

Investment Objective and Strategy

Objective:

To provide returns before expenses that correspond to the Nifty500 Momentum 50 TRI subject to tracking errors. 

There is no assurance that the investment objective of the scheme will be achieved.

Investment Strategy:

The scheme follows a passive investment strategy. The Scheme would invest in stocks comprising the underlying index and shall track the benchmark index. The Scheme may also invest in debt and money market instruments, in compliance with Regulations to meet liquidity and expense requirements. The Scheme shall invest in stocks forming part of the underlying Index in the same ratio as per the index, to the extent possible and to that extent follow a passive investment strategy, except to the extent of meeting liquidity and expense requirements. Events like the constituent stocks becoming illiquid in the cash market, the exchange changing the constituents, a large dividend going ex but lag in its receipts, etc. tend to increase the tracking error.

Why Invest in AXIS Nifty500 Momentum 50 Index Fund - Direct (G)?

AXIS Nifty500 Momentum 50 Index Fund - Direct (G) provides diversification across large, mid, and small-cap stocks, ensuring investors benefit from exposure to multiple market segments and industries. By passively tracking the index, it eliminates human bias in stock selection and follows a structured methodology for systematic rebalancing. Unlike actively managed funds, this approach keeps costs lower, and with the direct-growth option, investors can benefit from a reduced expense ratio, leading to better long-term returns.

Since momentum investing tends to perform well during bullish market conditions, it is well-suited for medium to long-term investors looking for growth-oriented opportunities. However, investors should be aware that momentum-based strategies can be volatile, particularly during market downturns. The fund also has an exit load of 0.25% if redeemed within 15 days of investment.

Strength and Risks – AXIS Nifty500 Momentum 50 Index Fund - Direct (G)

Strengths:

A key strength of this fund is diversification across large, mid, and small-cap stocks, reducing concentration risk while maximizing exposure to high-growth opportunities. The portfolio is automatically rebalanced to retain only the highest momentum stocks, ensuring continued alignment with market trends.

The fund offers a low-cost structure with a lower expense ratio compared to actively managed funds. The Direct Growth option enhances tax efficiency by reinvesting gains instead of distributing dividends, maximizing compounding benefits. Furthermore, with a low minimum investment of ₹100, it is accessible to a broad range of investors.

Risks:

One of the primary risks is high volatility. Momentum investing focuses on stocks that have recently performed well, but these stocks can be highly sensitive to market fluctuations. During market downturns, momentum stocks may experience sharp corrections, leading to potential losses.

Another risk is sector concentration. Since the fund selects stocks based purely on price momentum, it may become overweight in specific sectors that are currently performing well. This lack of sector diversification can increase exposure to sector-specific risks.

Trend reversals pose another challenge. Momentum investing relies on the assumption that stocks that have performed well will continue to do so. However, sudden market shifts or economic downturns can cause momentum stocks to underperform, leading to losses.

As a passive index fund, it lacks active management, meaning there is no flexibility to react to market changes beyond the index rebalancing schedule. This could result in the fund holding onto declining stocks until the next rebalancing period.

Liquidity risk is another factor, as some of the mid and small-cap stocks included in the index may have lower trading volumes, making it harder to exit positions during volatile market conditions.

Finally, macro-economic risks such as inflation, interest rate changes, or global events can impact market trends and cause significant fluctuations in momentum stocks.

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