According to reports from Business Standard, Motilal Oswal Asset Management Company has launched the new fund offer (NFO) for its Motilal Oswal Bombay Stock Exchange (BSE) Midcap 150 Momentum 30 Index Fund. The launch expands the range of smart beta momentum index funds and exchange-traded funds (ETFs) available to investors. Investors now have 27 single-factor momentum funds with combined assets under management (AUM) of ₹18,690 crore to choose from, as reported by Business Standard. These funds use a predefined, rules-based strategy to ride persistent price trends, following price behaviour measures such as trailing 12-month returns adjusted for volatility. As reported by Business Standard, momentum investing buys stocks with stronger recent price performance than their peers and avoids relatively weaker performers, selecting stocks based on price momentum rather than only market capitalisation.
According to Business Standard reports, momentum portfolios may trade more often than broad indices, which can raise transaction costs. The Nifty 200 Momentum 30 Index delivered about 52% in 2021 but fell by about 6% in 2022, before returning about 20% in 2024 and falling by about 5.1% in 2025**. During the 2008 financial crisis, momentum indices experienced severe drawdowns with the Nifty 200 Momentum 30 falling 60%, the Nifty Midcap 150 Momentum 50 declining 65.1%, and the Nifty 500 Momentum 50 dropping 64.2%. As noted by Business Standard, factor indices select a limited number of stocks from the underlying benchmark, creating greater concentration risk, with portfolios of only 30 stocks potentially developing substantial stock and sector concentration. Midcap momentum funds, in particular, may fluctuate even more because midcap stocks have wider price swings and lower liquidity, according to Business Standard reports.
According to recent market analysis, SpaceX has experienced significant volatility following its historic IPO debut. The stock debuted at $160.95 versus a $135 IPO price, with the average Wall Street 12-month target sitting at approximately $139–$160, creating an unusual street-vs-crowd divergence. The company raised $75 billion in its IPO, making it the largest ever, and has been trading in a critical technical region after pulling back into the 0.618 Fibonacci retracement level. Recent analysis shows the stock has experienced its first meaningful pullback after the IPO run, with shares falling roughly 5% and about 15% from intraday highs as traders took profits. The volatility is attributed to limited float with retail investors pouring roughly $225 million into the stock on a net basis in its first two days, accounting for around 75% of all net single-stock buying in the entire market over that stretch.
According to Business Standard, momentum funds are suitable for investors with a medium- to long-term horizon who are comfortable with relatively higher volatility. The strategy demands patience because returns can vary sharply across market cycles, making it better suited as a satellite allocation complementing a diversified core portfolio. As reported by Business Standard, investors should examine the underlying index's universe, check the number of constituents, stock and sector concentration, the period used to measure momentum, and how often the index rebalances. The strategy works best as one style within a diversified equity allocation rather than as a standalone strategy, with combining it with value, quality or broad-market exposure potentially improving risk-adjusted outcomes over a full market cycle. Investors can take advantage of the volatility in these funds by investing via systematic investment plans (SIPs), as noted by Business Standard.
According to Business Standard, experts recommend that investors should check the underlying index and concentration, and invest for at least five years. The strategy works best when recent winners continue to outperform, with momentum funds typically benefiting when trends and market leadership remain stable. However, sharp reversals, directionless markets and frequent leadership changes can cause underperformance. An index that rebalances only once every three or six months may continue to hold stocks that no longer meet its objective, and higher turnover can increase transaction costs. As noted by Business Standard, momentum funds generally underperform during highly volatile, range-bound or sharply reversing markets, with the index continuing to hold recent winners until the next scheduled rebalancing even after market leadership changes. The methodology ensures consistency and discipline in portfolio construction, following transparent, rules-based investment processes without relying on fund manager judgement.
