NFO alert: Baroda BNP Paribas Mutual Fund launches Nifty 200 Momentum 30 Index Fund; should you invest?

Baroda BNP Paribas Mutual Fund has introduced a new fund called the Baroda BNP Paribas Nifty 200 Momentum 30 Index Fund. The new fund will open on September 25, 2024, and close on October 9, 2024.

“The scheme is designed to tap into the power of momentum investing, offering investors a smart, passive strategy to leverage the top 30 momentum stocks from the Nifty 200 Total Return Index,” the company said in a statement released on September 24.

The mutual fund will invest in a portfolio of 30 companies that are part of the Nifty 200 Momentum 30 Index based on their normalised momentum scores. The Nifty 200 comprises the largest 200 companies according to market capitalisation, and therefore, this fund will reduce the risk of exposure to smaller companies which are considered to be risky, it said.

“Our Baroda BNP Paribas Nifty200 Momentum 30 Index Fund seeks to offer the best of both worlds—cost-efficiency of passive investing and the potential for outperformance by taking advantage of factor-based investing,” Suresh Soni, CEO, Baroda BNP Paribas AMC said.

Factor investing is about choosing securities to invest on the basis of specific characteristics that provide greater returns.

“Our analysis of factors indicates that momentum factor has one of the best performance track record in India. This approach has shown good results in back-testing, with the Momentum strategy (as represented by the Nifty 200 Momentum 30 Index) outperforming the Nifty 50 Index consistently,” Soni added.

According to the statement, data analysis over the past 15 years has shown that the Nifty 200 Momentum total return index (TRI) has a compounded annual growth rate (CAGR) of 22 per cent.

Baroda BNP Paribas Mutual Fund is an asset management company formed after the merger of Bank of Baroda Mutual Fund and BNP Paribas Asset Management on March 14, 2022. The company currently provides 39 schemes in various categories, such as equity, hybrid, debt, and overseas funds, in over 166 towns and cities across the country.