NFO Alert: Samco Mutual Fund launches Active Momentum Fund; all you need to know

Samco Mutual Fund announced the launch of the Samco Active Momentum Fund, an open-ended equity scheme following a momentum theme.

The scheme opened for public subscription on June 15, 2023, and will close on June 29, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment.

What kind of mutual fund scheme is this?

This is an open-ended equity fund scheme following the momentum theme.

Commenting on the launch, Viraj Gandhi, CEO, Samco Asset Management said, “We are excited to introduce SAMCO Active Momentum Fund as India's first actively managed Momentum Fund and this represents an exciting step forward for the Indian investment landscape. We believe this fund will open new avenues for investors seeking to benefit from momentum investing. With our dedicated team and a robust investment strategy, we are confident in delivering value to our investors.”

What is the main objective of investing in this fund?

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 positive price momentum–based on the phenomenon that stocks that 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. However, there can be no assurance or guarantee that the investment objective of the scheme.

How may one invest in this scheme?

Investors can invest under the scheme with a minimum investment of Rs 5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.

Under normal circumstances, the asset allocation of the scheme will be as follows:

Are there similar mutual funds in the market?

To date, no asset management company (AMC) has launched such a fund, thus, making Samco Active Momentum Fund India’s first active momentum fund. Leveraging the persistent and globally acclaimed momentum anomaly in finance, this pioneering fund aims to deliver exceptional risk-adjusted returns to investors, tapping into the immense potential of momentum investing in the Indian market.

Umesh Kumar Mehta, Chief Investment Officer, Samco Asset Management said, “Historically, the momentum factor, or the phenomena based on the persistence of stock price trends has been one of the strongest return generators. In momentum investing, active management offers several unique advantages such as a wider investible universe, quicker rebalancing and hedging flexibility during periods of anti-momentum. By investing in stocks exhibiting momentum characteristics, we aim to offer our investors the potential for superior risk-adjusted returns.”

How will the scheme benchmark its performance?

The scheme’s performance would be benchmarked against the Nifty 500 TRI.

NIFTY 500 TRI represents the top 500 companies based on market capitalization from the eligible universe. The NIFTY 500 TRI represents over 95% of the free float market capitalization of the stocks listed on the NSE. The index is a fair representation of the indicative universe of the portfolio of the Scheme. In view of the same, the performance of the scheme will be benchmarked with NIFTY 500 TRI.

The Trustee/AMC reserves the right to change the benchmark for the evaluation of the performance of the Scheme from time to time, keeping in mind the investment objective of the Scheme and the appropriateness of the benchmark, subject to SEBI guidelines and other prevalent guidelines.

Are there any entry or exit loads to this scheme?

This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme. The “Exit Load” would be charged as per the following:

• 2% if the investment is redeemed or switched out on or before 365 days from the date of allotment of units
• 1% if the investment is redeemed or switched out after 365 days but on or before 730 days from the date of allotment of units

No Exit Load will be charged if the investment is redeemed or switched out after 730 days from the date of allotment of units.

Who will manage this scheme?

The fund will be managed by Paras Matalia. Further, Dhawal Ghanshyam Dhanani is the dedicated fund manager for making overseas investments as permitted under the regulations, guidelines and circulars issued from time to time.

Does the fund contain any inherent risk?

The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.