Risk-averse individuals must, however, stay away from this product as returns could be volatile and the scheme has no track record, said analysts.
Samco Active Momentum Fund is designed to select stocks based on technical characteristics such as breakouts and price leadership.
According to Samco, momentum investing has outperformed traditional buy-and-hold strategies. For instance, in the past 18 years, the Nifty 200 Momentum 30 index has returned 17.79%, and the Nifty Midcap 150 Momentum 50 index has gained 21.28% on an annualised basis. In comparison, the Nifty 50 and the Nifty 500 indices returned 12.48% and 12.28%, respectively, during this period.
“Institutions have been adopting momentum strategies to chase returns. Now, retail investors have access to such a strategy through a mutual fund scheme and they can benefit from alpha being generated,” said Anurag Garg, founder of Nivesh.com. “Such strategies can be volatile and investors should be well aware of the risks involved in these strategies.”
The fund, which is currently open, will stop accepting money on June 23. Samco said the scheme will not accept subscriptions either through fresh lumpsum or SIP route after the (NFO period until further notice. There will be an exit load or redemption fee of 2% if the money is pulled out before 365 days. It will be 1% for redemption between 365 and 730 days. Beyond 730 words, there is no exit load.Some financial planners are uncomfortable with investment strategies that are not tried and tested.”Wait and watch for performance before allocating to any new strategy which does not have a proven track record,” said Harshvardhan Roongta, chief financial planner at Roongta Securities.
Samco Mutual Fund is a one-and-a-half-year-old asset manager with assets under management of ₹841 crore held by two equity schemes and one overnight scheme.
Financial planners warn that investors must be careful about projecting a scheme’s performance based on back-tested returns.
“First-time investors or those who want simplicity are better off with diversified equity mutual funds that follow simple growth or value-oriented strategies,” said Juzer Gabajiwala, director at Ventura Securities.
