Is Samco Active Momentum Fund NFO Worth Investing In?

Samco has launched a new fund offer for its Active Momentum Fund.This his NFO will open on his 15th^th Closed on June 23rd^rd June 2023 during the initial NFO period. According to Samco MF, the Nifty50 has generated a 12% annualized return over the past 18 years, while the Nifty200 momentum and the Nifty Midcal 150 momentum have generated returns of 17% to 21%. Should You Invest in Samco Active Momentum Fund NFO?What are the risk factors to consider before investing in such funds?

Also read: ChatGPT recommends mutual funds to invest in in 2023

Samco Active Momentum Fund NFO Issue Details

Fund’s investment strategy

The investment objective of the scheme is to seek long-term capital growth by investing in stocks that are showing strong momentum. Momentum stocks are the phenomenon in which stocks that have performed well in the past compared to other stocks (winners) will continue to do well in the future, while stocks that have performed relatively poorly (losers) will continue to do well. Stocks that exhibit positive price momentum based on Poor performance.

There is no assurance that the investment objectives of this plan will be achieved.

Samco Active Momentum Fund NFO – Why Should You Invest?

1) Active Momentum Strategy: The fund follows an active investment strategy aimed at identifying momentum stocks such as breakouts and price leadership. This approach has the potential to produce excellent risk-adjusted returns for investors.

2) Real-time rebalancing: The fund’s system detects the rise or fall of momentum in specific stocks and rebalances the portfolio in real time. This enables rapid adjustments to seize opportunities and effectively manage risks.

3) Hedging against counter-momentum: The scheme includes a hedging mechanism that protects the downside when the market has little or no momentum. This feature helps mitigate losses during periods of market downturn or low momentum.

4) Proven Excess Earnings: MSCI’s historical research shows that the momentum factor is a strong generator of excess returns, significantly outperforming the base index. This suggests that investing in momentum stocks can lead to favorable investment results.

5) Win the Broader Market: The NSE (India) Nifty500 and Nifty200 Momentum 30 indices have historically significantly outperformed the broader markets and their respective base indices. This demonstrates the potential for the Samco Active Momentum Fund to outperform the market.

6) Advantages of Aggressive Investment: Active investments made by the Fund have several advantages over passive investments. These include momentum period-only exposure, use of both relative and absolute momentum, flexibility in sizing capital and positions, and the ability to invest across different market caps. These factors contribute to the fund’s potential to generate higher returns.

Risks/Disadvantages of Investing in Samco Active Momentum Fund

1) Limited Subscription: Applications for the Samco Active Momentum Fund will only be accepted during the New Fund Offer (NFO) Period and will be restricted after the NFO Period until further notice. This restriction may hinder potential investors who wish to invest in the Fund at a later time, and may prevent new funds from being available for investment by such Funds during market downturns.

2) Limited Universe: The Fund’s proprietary Momentum Search Algorithm scans a universe of 750 stocks, including microcaps, to identify stocks with momentum. While this may provide greater diversity of choice, the limited universe may limit the Fund’s investment opportunities compared to funds with a broader investment universe.

3) Exit load charge: The fund imposes a high exit load fee on redemptions or conversions made within a certain period of time. This fee structure may discourage investors who need liquidity or want to change their investment holdings within a set period of time.

4) High Risk: The risk-o-meter associated with the Samco Active Momentum Fund indicates that the principal investment is subject to a very high degree of risk. Investors should be aware that the value of their investments may fluctuate significantly and that they may suffer significant losses.

5) Past performances cannot be repeated. Past earnings are not indicative of future earnings.

6) Uncertainty of future earnings: The scheme shows that the Momentum Factor has the potential to generate excess returns, but does not provide any guarantees. The Fund’s performance may be affected by various market factors and may not consistently reproduce past performance or outperform the benchmark index in the future.

Performance of existing mutual funds in this category

There is currently no single mutual fund in this category.

Also read: Best Mutual Fund That Generates 100 Million Rupees With 50k SIP

Samco Active Momentum Fund NFO – Should You Invest or Avoid?

The fund offers several positives, including its goal to generate superior risk-adjusted returns through its Momentum Seeking Algorithm and the historic success of the Momentum Factor in generating excess returns. Additionally, the fund’s strategy of real-time rebalancing and hedging in anti-momentum situations can be advantageous.

However, there are some negative factors to consider, such as subscription limits during and after NFO, investment universe limits, exit load fees, high risk indicated by risk-o-meter, and uncertainty of future returns. High-risk investors can invest in Samco Active His Momentum His funds for the medium to long term.

Information source: Samco Active Momentum Fund SID

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Suresh KP is the founder of Myinvestmentideas. He is his NISM Certified – Investment Advisor and he is a NISM Certified – Research Analyst. He has been analyzing financial markets for the past 20 years. Contact information is as follows: [email protected]

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