Tata Nifty Midcap 150 Momentum 50 Index Fund: Evaluation


Tata MF has launched Tata Nifty Midcap 150 Momentum 50 index fund. Picks momentum shares from the midcap universe. The again check outcomes are beautiful, much better than any of the issue merchandise I’ve reviewed. However and there are at all times buts.

Often, I add the warnings/caveats in the direction of the tip of product evaluate publish. Nonetheless, the again check outcomes for Nifty Midcap 150 Momentum 50 index are so good that I considered beginning with the caveats first. Right here you go.

  1. Previous efficiency might not repeat sooner or later.
  2. For this index, there is no such thing as a previous efficiency within the first place. Your complete information is again examined.
  3. The index was launched solely in August 2022. Subsequently, negligible dwell efficiency information.
  4. If an index supplier is launching an index, the again check outcomes have to be nice. What’s the level of launching an index has not even delivered within the again exams? Furthermore, no AMC would launch merchandise monitoring an index with poor previous efficiency.
  5. NSE would have evaluated a number of definitions of Midcap momentum index. They might have chosen the definition of midcap momentum that delivered the perfect ends in the again exams. The outperformance might merely a results of curve-fitting. Therefore, we should take such information with a pinch of salt. Must see longer dwell efficiency.
  6. Investor cash will chase profitable funding methods. Extra money will circulation into the technique. Simply it will scale back alpha (extra returns) from an funding technique.
  7. This index selects shares from universe of midcap shares. As you go down the market spectrum, the slippages and impression price will increase. Therefore, you’ll be able to anticipate monitoring error to be a lot larger than Nifty 50 index funds/ETFs.

How you can assemble the “Greatest Portfolio” utilizing index funds and ETFs?

Efficiency comparability of all issue indices (High quality, Low Volatility, Momentum, Worth, Alpha)

What’s Nifty Midcap 150 Momentum 50 index? How does it choose shares?

Nifty Midcap 150 Momentum 50 selects shares from the universe of midcap shares (Nifty Midcap 150).

Nifty Midcap 150 is the father or mother index.

Launch Date: August 16, 2022

Base Date: April 1, 2005

Rebalancing Frequency: Semi-Annual

Weight of a single inventory capped at 5%

The inventory choosing methodology is just like the Nifty 200 Momentum 30 index. From the universe of shares, normalized momentum rating is decided for every inventory primarily based on 6-month and 12-month worth returns, adjusted for volatility. The shares which have delivered over these time frames can have higher momentum scores in comparison with shares that haven’t performed nicely.

Notice that momentum shares will not be nearly returns. The trail can also be essential. Between two shares A and B with the identical worth efficiency, the inventory with a smoother rise will get a greater momentum rating.

Inventory A: 100, 120, 155, 170, 180, 200

Inventory B: 100, 150, 135, 185, 170, 200

Each shares have gone up from 100 to 200. However inventory A had a smoother rise (decrease volatility). Thus, A will get a greater momentum rating than inventory B.

For extra particulars in regards to the index, you’ll be able to check with the Factsheet and the Index methodology.

Nifty Midcap 150 Momentum 50 index: Efficiency Comparability

We examine the efficiency of the next indices since April 1, 2005, till September 30, 2022, in opposition to the Midcap Momentum index.

  1. Nifty 50 TRI (no comparability is full with Nifty 50)
  2. Nifty Subsequent 50 TRI (this index behaves extra like a midcap fund) Evaluation
  3. Nifty Midcap 150 TRI (that is the father or mother index)
  4. Nifty 200 Momentum 30 (we have already got index funds/ETFs monitoring this momentum index) Evaluation
  5. Nifty Midcap 150 High quality 50 (that is one other issue product from the midcap universe) Evaluation
  6. Nifty Alpha 50 Evaluation (this index had additionally performed fairly nicely)
Tata Nifty Midcap 150 Momentum 50 index fund

In these 17.5 years (April 2005 – September 2022), the Nifty Midcap 150 Momentum 50 index has gone 40X.

Rs 100 grows to Rs 4,000.

CAGR of 23.47% p.a.

Your cash doubles each 3 years.

No different index comes remotely shut.

Its cousin Nifty 200 Momentum 30 index is the closest competitors. Delivers 19.73% p.a. Rs 100 grows to Rs 2,335. Superb however 40% decrease than Midcap momentum index.

Nifty 50: CAGR of 14.27% p.a. Rs 100 grows to Rs 1,031 over the identical interval.

Nifty Midcap 150: CAGR of 16.54% p.a. Rs 100 grows to Rs 1,456.

Allow us to have a look at the calendar 12 months returns.

Tata Nifty Midcap 150 Momentum 50 index fund review

We thought of 16 full years on this train.

Midcap Momentum Index beats Nifty 50, Nifty Subsequent 50, and Nifty Midcap 150: in 12 out of 16 years.

Nifty Alpha 50 and Nifty Midcap 150 High quality 50 index: in 10 out of 16 years.

Nifty 200 Momentum 30 index: in 8 out of 16 years

Fairly constant performer, at the least in again exams.

The worst years have been 2008 and 2018.

Now, allow us to have a look at the efficiency over blocks of 5 years.

Tata Nifty Midcap 150 Momentum 50 index fund Performance comparison

Stark outperformance in 2011-2015 and 2021-Sep 30, 2022.

An fascinating statement about Nifty 200 Momentum 30 index: Have a look at how constant its efficiency is throughout varied 5-year durations.

Allow us to have a look at the general efficiency. No surprises right here. Midcap momentum index does higher on all return parameters.

An fascinating statement is that Midcap Momentum has decrease volatility than its father or mother index Nifty Midcap 150. We are inclined to affiliate momentum shares with larger volatility.

Nonetheless, should you look intently on the methodology, low volatility is a crucial a part of inventory choice in momentum index. We noticed this within the evaluate publish on Nifty 200 Momentum 30 index too. The Momentum index was much less risky than its father or mother index (Nifty 200).

Nifty Midcap 150 Momentum 50 index: Rolling Returns

Nifty Midcap 150 Momentum 50 index rolling returns
Nifty Midcap 150 Momentum 50 index vs Nifty 200 Momentum 30 index

Nifty Midcap 150 Momentum 50 index: Volatility and Most Drawdowns

The midcap momentum index beats the father or mother index on each Most drawdowns and rolling threat rely too.

Nifty Midcap 150 Momentum 50 index analysis

Which Momentum Index is best?

Nifty 200 Momentum 30 or Nifty Midcap 150 Momentum 50?

We have already got a Momentum index. Nifty 200 Momentum 30 index. And we have already got index funds and ETFs monitoring this index. The index selects 30 momentum shares from universe of Nifty 200 shares. High 100 massive cap shares and 100 midcap shares.

Nifty Midcap 150 Momentum 50 picks 50 momentum shares from the universe of midcap shares.

I would not have a really crisp reply right here.

I like momentum investing. Each are momentum indices.

If I needed to decide one Momentum index product, I’d go along with Nifty 200 Momentum Index fund.

Why?

Despite the fact that Nifty Midcap Momentum 50 beats Nifty 200 Momentum in returns information, I select Nifty 200 Momentum for the next causes.

  1. Nifty 200 Momentum 30 index has longer dwell information (since August 20). Nifty Midcap Momentum has negligible historical past
  2. It’s a broader index (not simply restricted to midcap shares)
  3. Appears extra constant (have a look at 5-year information)
  4. Much less risky (check with Rolling threat chart)
  5. Will probably have decrease monitoring error in comparison with Nifty Midcap Momentum index

I feel I’ve not but been capable of type conviction in regards to the midcap momentum index. Thus, I’m simply discovering methods to justify my selection. My opinion might change/evolve over a interval.

How can I exploit Nifty Midcap 150 Index Fund in my portfolio?

If you wish to use Midcap Momentum index fund in your portfolio, you’ll be able to contemplate this a part of your satellite tv for pc portfolio.

You may embrace this fund in your midcap publicity, doubtlessly as an alternative choice to actively managed midcap fund. Assume Midcap High quality and Midcap Momentum might be an fascinating combine for constructing midcap publicity.

Don’t dive headlong into this fund primarily based on again check outcomes. Construct the publicity steadily. You may additionally have the opportunity construct conviction alongside the way in which. No funding technique outperforms on a regular basis. The truth is, no funding technique can maintain alpha over the long run if the technique doesn’t undergo durations of underperformance. Conviction turns out to be useful throughout such antagonistic phases.

And sure, contemplate all of the caveats shared in the beginning of this publish.

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