Motilal Oswal Active Momentum Fund – Direct (G) : NFO Details

An open-ended equity plan based on the momentum factor concept will be the Motilal Oswal Active Momentum Fund – Direct (G). By primarily investing in equities and equity-related securities and using a momentum factor-based approach to stock selection, the scheme's investment goal will seek to generate long-term capital appreciation.

Motilal Oswal Active Momentum Fund – Direct (G) will be managed by Ajay Khandelwal, Varun Sharma, and Rakesh Shetty, and its performance will be compared to the Nifty 500 TRI. For lump sum, a minimum application fee of Rs 500 is required, followed by multiples of Re 1. The minimum investment amount for SIP is Rs 500, and it must be made in multiples of Rs 1 with a minimum of 12 installments.

Details of the NFO: Motilal Oswal Active Momentum Fund – Direct (G)

Investment Objective and Strategy

Objective:

To achieve long term capital appreciation by predominantly investing in equity and equity related instruments by  investing through a Momentum factor-based approach for stock selection. However, there can be no assurance that the investment objective of the Motilal Oswal Active Momentum Fund – Direct (G) will be realized.

Investment Strategy:

The Motilal Oswal Active Momentum Fund – Direct (G) seeks to achieve long term capital appreciation by predominantly investing in equity and equity related instruments by investing through a Momentum factor-based approach for stock selection.

The corpus of the Motilal Oswal Active Momentum Fund – Direct (G) will be invested primarily in Equity and Equity Related Securities. The Scheme may  invest its  corpus  in  units  of  Liquid Schemes, Debt  Schemes REITs, InvI Tsand Money Market Instruments, G-Sec, Bonds, Cash and cash equivalents etc.

Subject to the Regulations and other prevailing Laws as applicable, the corpus of the Scheme can be invested in any (but not exclusively) of the following Securities:

• Equity and Equity Related Securities
• Debt and Money Market instruments (including cash and cash equivalents)Liquid and Debt Scheme
• Derivatives as may be permitted by SEBI / RBI
• Units of REITs and InvITs
• Units of Mutual Fund
• Pending deployment of funds as per the investment objective of the Scheme, the funds may be parked in short term deposits of scheduled commercial banks, subject to guidelines and limits specified by SEBI.
• Any other instruments  as may be  permitted  by RBI / SEBI regulatory authorities  under prevailing Laws from time to time.

The investment restrictions and the limits are specified in the Schedule VII of SEBI Regulations which are mentioned in the section ‘Investment Restrictions.

The Motilal Oswal Active Momentum Fund – Direct (G) aims to generate returns by investing in securities of companies that derive from companies exhibiting robust momentum. Momentum investing entails maintaining a portfolio of securities that have demonstrated favourable price trends over multiple timeframes. The momentum strategy may utilize multiple parameters, including price  change, growth metrics and return indicators. The investment process begins with an analysis of liquidity and the availability of relevant data. Following this, a series of qualitative and quantitative screening criteria are applied to eliminate companies that do not meet the investment standards.

Motilal Oswal Active Momentum Fund – Direct (G)’s investment universe is top 1,000 companies by market capitalization. The Scheme employs a proprietary quantitative model to rank these stocks based on their momentum. This model calculates a momentum score using one or multiple metrics. For  example, the fund might implement a price-based momentum strategy, evaluating the change in price movement of stocks over different periods, such as six months or twelve months or any other period to measure and select stocks. Subsequently, the fund manager reviews the model's output alongside their assessment of current market conditions or best opportunity criteria to select stocks and determine their respective weights within the portfolio. This discretionary process is designed to maximize momentum exposure.

This to overweight sectors  and  stocks  that  are  outperforming  relative  to  its  benchmark  index, adjusting  dynamically  as  market leaders shift. Additionally, the Scheme retains the flexibility to engage in opportunistic trading to balance the desired momentum exposure while striving to enhance risk-adjusted returns. During periods when the overall market is trending downward or exhibiting negative sentiment, or based on the fund manager’s discretion, the Scheme may allocate up to 100% of its net assets to equity and equity-related Draft SID of Motilal Oswal Active Momentum Fund16instrument derivatives for hedging purposes.

The fund strategy will be reviewed, and the portfolio will be regularly adjusted to maintain a momentum exposure. The strategy will also be constantly evaluated and the fund manager has the discretion to modify the qualitative and quantitative metrics used to optimize the risk adjusted return. The fund will be actively managed and will have the flexibility to invest across market caps and sectors with a focus on high-quality high growth companies. The scheme may also invest up to 20% of the total assets of the Scheme in other than companies that will  follow the momentum factor based investing. The AMC will endeavor to meet the investment objective of the Scheme while maintaining a balance between safety, liquidity and return on investments

Risk Associated with Investing in Motilal Oswal Active Momentum Fund (G)

The portfolio will be constructed using our in-house proprietary screens, which evaluate various factor metrics, including historical price performance, volatility of returns, relative performance, liquidity, etc.

The Scheme will be a diversified equity fund, predominantly investing in equity and equity-related securities selected based on these proprietary screens. Being thematic in nature, the Scheme will be affected by the risks associated with the momentum  theme. Consequently, the momentum theme-based portfolio may exhibit higher volatility compared to other diversified equity-oriented schemes.

Investing in thematic schemes implies that the Scheme will focus on companies aligned with a specific theme, which may limit its capability to invest in other companies or themes. As with all equity investments, there is a risk that companies within the theme may not achieve expected earnings results, or that unexpected market changes or internal company developments may adversely affect investment outcomes. Risks  inherent  in  momentum  trading  include  entering  a  position  too  early,  exiting  too  late,  and  missing  key trends. Additionally, frequent portfolio churning may lead to substantial losses due to adverse developments in capital  markets  or  unfavorable  market  movements.  As  such,  there  can  be  no  assurance  that  the  investment objective of the Scheme will be realized.

The  Scheme-related  risks  include,  but  are  not  limited  to, market  risk,  business  risk,  derivatives  risk, concentration risk, interest rate risk, reinvestment risk, basis risk, spread risk, liquidity risk, credit/default risk, counterparty  risk,  duration  risk,  settlement  risk,  performance  risk, prepayment  risk,  risks  associated  with investment in REITs and InvITs, risks associated with investment in debt instruments with special features, risks associated with securities lending, risks associated with investing in Securities Segment and Tri-party Repo trade settlement, and risks associated with the creation of segregated portfolios

What type of Investor should Invest in Motilal Oswal Active Momentum Fund – Direct (G)?

• The Motilal Oswal Active Momentum – Direct (G) NFO is ideal for aggressive investors seeking long-term capital appreciation through a momentum-based strategy.
• It suits those comfortable with high volatility, sector rotation, and active fund management.
• The fund is best for seasoned investors who understand market trends and are willing to ride short-term fluctuations for higher returns.

It also works well for SIP investors looking to invest systematically in momentum-driven stocks. However, conservative or low-risk investors seeking stable and predictable returns should avoid this fund. It is most suitable for those who already have a diversified portfolio and want to enhance returns dynamically.