Publish Date:
Union Mutual Fund has launched Union Active Momentum Fund, it is an open-ended equity scheme following momentum theme.
Momentum investing is a strategy that seeks to capitalize on market trends by investing in stocks or sectors that have shown strong recent performance. This approach can deliver impressive returns during trending markets, as it rides the wave of market momentum.
However, the strategy comes with significant risks, especially during market reversals or periods of heightened volatility, as momentum stocks tend to be overvalued and can experience sharp corrections.
[Read: Market Volatility: How to Build an All-Weather Winning Mutual Fund Portfolio]
For investors considering funds based on the momentum strategy, it's important to align this approach with their risk appetite and investment horizon. In addition, investors should be prepared for potential drawdowns and should carefully assess whether they understand and can handle the risks associated with this style of investing.
Details of Union Active Momentum Fund:
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Investment Objective |
The investment objective of the Scheme is to seek to generate long-term capital appreciation by investing in stocks showing strong momentum. Momentum stocks are such that exhibit relatively superior price momentum - based on the phenomenon that stocks which have performed well in the past relative to other stocks (winners) continue to perform well in the future, and stocks that have performed relatively poorly (losers) continue to perform poorly. The portfolio of stocks will be selected, weighted and rebalanced using proprietary screens.
However, there is no assurance or guarantee that the investment objective of the Scheme will be achieved. The scheme does not assure or guarantee any returns |
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Category |
Sectoral/Thematic Fund |
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SIP/STP/SWP |
Available |
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Min. Investment |
Rs 1,000/- and in multiples of Re 1 thereafter. Additional Purchase Rs 1,000/- and in multiples of Re 1 thereafter. |
Face Value |
Rs 10/- per unit |
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Plans |
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Options |
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Entry Load |
Not Applicable |
Exit Load |
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1% if redeemed or switched out on or before completion of 1 year from the date of allotment of units.
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Nil if redeemed or switched out after completion of 1 year from the date of allotment of units.
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Fund Manager |
- Mr Gaurav Chopra
- Mr Sanjay Bembalkar |
Benchmark Index |
NIFTY 500 TRI |
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Issue Opens: |
November 28, 2024 |
Issue Closes: |
December 12, 2024 |
(Source: Scheme Information Document)
What will be the investment strategy for Union Active Momentum Fund?
Union Active Momentum Fund will follow an active investment strategy by investing in stocks showing strong momentum and will make investments as per the asset allocation pattern of the Scheme.
Momentum investing is a rule-based investment strategy in which the fund manager seeks to buy securities that are rising and sell them when they look to have peaked. The goal is to work with volatility by analyzing the momentum of the securities.
The investment strategy of the Scheme will be reviewed from time to time and might change considering the best interest of the unitholders and if the market conditions warrant it. Since the investments shall be based on rules with an aim to capture high momentum stocks and aims at rebalancing atleast on quarterly basis, the turnover in the portfolio can be significantly high as compared to other schemes.
[Read: Momentum Investing: All You Need to Know About Momentum Mutual Funds]
Fund managers may take tactical positions based on market conditions, sectoral trends, and valuation parameters. The fund will aim to identify market opportunities dynamically, balancing momentum and other factors to generate alpha.
How will the scheme allocate its assets?
Under normal circumstances, Union Active Momentum Fund will hold an allocation of 80% to 100% in Equity and equity-related instruments related to momentum Theme, 0% to 20% in Debt and Money Market Instruments including units of debt oriented mutual fund schemes and 0% to 10% in Units issued by REITs and InvITs.
Should investments in Union Active Momentum Fund be considered?
Union Active Momentum Fund seek to generate long-term capital appreciation by investing in stocks showing strong momentum. Momentum funds focus on investing in high-performing stocks or sectors with the expectation that they will continue their upward trajectory.
The fund's dynamic nature allows it to adapt to changing market conditions, potentially enhancing returns. However, momentum funds come with certain risks. They rely heavily on market trends and can underperform in volatile or sideways markets.
[Read: The Ultimate Guide to the Best SIP Plans for 2025]
Additionally, these funds prioritize recent performance over fundamentals, which may lead to exposure to overvalued stocks. The active nature of the fund also means higher churn, transaction costs, and expense ratios compared to passive investment options. Given that, how fund manager builds the portfolio using momentum strategy remains to be seen.
Thus, this makes momentum funds better suited for aggressive investors who understand the nature of momentum-based strategies and are comfortable with market fluctuations.