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In Unit Linked policies, the investment risk in investment portfolio is borne by the policyholder. ...Read More

NIFTY 500 MOMENTUM 50 INDEX

High inflation has undermined investors' returns from fixed-interest income assets like fixed deposits, government and corporate bonds, and certificates of deposits. Though the returns are guaranteed, they do not fit the aspirations of investors seeking returns over time to meet their financial goals. As a result, most are now looking at market-related assets for returns that help keep pace with the growing inflation. ...Read More

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NIFTY 500 MOMENTUM 50 INDEX

Nifty 500 Momentum 50 Index – Meaning, Stocks, Performance and Returns

NIFTY 500 Momentum 50 Index - Meaning, stocks, performance and returns
October 14, 2024

Table of Content

 

The Nifty 500 Momentum 50 Index is an index devised by the National Stock Exchange (NSE), India. The objective of the index is to track the performance of 50 companies selected out of the Nifty 500 Index. Companies that have demonstrated the highest momentum will be listed in the NIFTY 500 Momentum 50 Index. 

The Nifty 500 Momentum 50 Index is devised based on the principle of momentum, i.e., the stocks that have performed well in the past will continue to perform well and maintain a positive trend. The 50 top stocks that have shown the strongest upward price movement for the past 6 and 12 months are shortlisted from the Nifty 500 Index.

Volatility adjustments of these stocks are done to ascertain that stocks with stable performance are only included in the index. This reduces the risk associated with highly volatile companies.

Historically, the Nifty 500 Momentum 50 Index has recorded higher annualized returns than the traditional benchmark indices. These returns, however, come with a higher risk. During the period of last 10 years, the index has provided annualized returns of 22.7%.

It is important to note that the performance of momentum stocks can fluctuate significantly, and investors should be prepared for potential volatility. This index is ideal for aggressive growth-oriented investors with a high-risk appetite.

Unit Linked Insurance Plans (ULIPs)

A Unit Linked Insurance Plan (ULIP) is an insurance policy that has both insurance and investment components. A part of the premium paid towards the policy is invested in market-linked assets like equity and debt to help your money grow. The rest of the premium provides life cover and secures your family financially in case of any unforeseen happening.

You can choose from a variety of funds available in the plan and switch funds in between to align with your reformed risk appetite and goals. ULIP is very transparent in disclosing the charges, premiums, and the funds where your money is invested. However, there is a lock-in period of 5 years, during which period you cannot withdraw or surrender the funds invested in the unit-linked insurance products. After the lock-in period, you are allowed to withdraw funds partially in case of emergencies.

ULIP gives investors the flexibility to choose from various fund options depending on their risk tolerance and time horizon. Investors can take advantage of this aspect and purchase insurance plans from ULIP that offer equity fund options linked to the Nifty 500 Momentum 50 Index. By doing so, investors can gain exposure to companies with strong price momentum. This is an ideal choice for investors seeking capital appreciation during the bullish market trend.

If you have chosen a ULIP that permits the switching of funds depending on the market conditions and your financial goals, you can shift from other funds to the Top 500 Momentum 50 Fund* when the high momentum trend prevails in the market.

What is NIFTY 500 Momentum 50 INDEX?

The Nifty 500 Index contains the top 500 companies listed on the NSE Index. The objective of the Nifty 500 Momentum 50 index is to track the performance of 50 companies out of the Nifty 500 index based on their Normalized Momentum Score. 

The Momentum Score is assigned based on the companies' 6-month and 12-month price returns adjusted to volatility. Those with the highest returns will have the highest momentum scores and vice-versa. This helps the investors capture the momentum trend of stocks with the highest normalized momentum score shortlisted from the Nifty 500 index.

Top 500 Momentum 50 Fund is benchmarked to Nifty 500 Momentum 50 Index and is available with the following ULIP Plans. Life Insurance coverage is available in the ULIP products listed.

  • HDFC Life Sampoorn Nivesh (UIN: 101L103V03)
  • HDFC Life Smart Protect Plan (UIN: 101L175V04)
  • HDFC Life Click 2 Invest (UIN: 101L100V05)
  • HDFC Life Click 2 Wealth (UIN: 101L133V03)

Key Features of NIFTY 500 Momentum 50 INDEX

The key features of the Nifty 500 Momentum 50 Index are:

Momentum-based Selection

The Momentum 50 index comprises 50 of the top companies with the highest momentum scores selected from the stocks listed in the Nifty 500 index. The yardstick for measuring the momentum is the price performance of the stocks in the past 6 and 12 months adjusted to volatility.

Diversified Exposure

The Nifty 500 Momentum 50 Index is not confined to a single sector. It has stocks from various sectors of the economy. However, sectors with strong growth momentum, like pharmaceuticals, information technology, and consumer goods, dominate the rest. This provides exposure to a broad spectrum of economic activities while concentrating on momentum.

Semi-annual Balancing

The Nifty 500 Momentum 50 Index is rebalanced semi-annually. The scores are calculated, and readjustments are made to reflect the latest market trend. Stocks that no longer meet the momentum scoring criteria are replaced with the ones indicating the highest momentum.

Weightage Based On Free-Float Market Capitalization

Free-float market capitalization is considered for the weightage of the selected stocks. This means only the shares available for public trading are included. This is to ascertain that the index reflects the market fluctuation of the most liquid and investible portion of the companies.

Risk-Adjusted Returns

The selection of the stocks is based on Normalized Momentum Scores, i.e., calculation of momentum scores based on the six and 12-month price returns adjusted to daily price volatility. This mitigates the risk of investing in highly volatile stocks while focusing on the upward trend.

Transparency

The rule-based methodology adopted in the selection of stock listed in the index is transparent and available to the public. This defines the integrity of the index and makes it simpler for the investors to understand the composition.

Nifty 500 Momentum 50 Index Methodology

The selection process adopted by the Nifty 500 Momentum 50 Index is rigorous and involves the following:

Eligibility

  • The stocks should be listed under the Nifty 500 Index.
  • It should be available for trading under the Fand O segment with limited price hits.
  • The shares pledged by promoters for financial requirements should be less than 20%.
  • The stocks with low scores on liquidity parameters are excluded.

Construction of Index

  • The normalized momentum score of individual stocks is calculated based on the six and 12-month price returns adjusted for volatility.
  • A selection of 50 stocks with the highest momentum score are shortlisted.
  • The weightage of each stock in the index is arrived at by a combination of momentum score and free-float market capitalization.

Index Management

  • The index is rebalanced semi-annually during June and December.
  • A four-week notice is given before the rebalancing.

Governance

  • A professional team with a strong governance structure comprising the Index Advisory Committee, Board of Directors, and Index Maintenance Sub-Committee oversees the index management.

What Are The Key Sectors in NIFTY 500 Momentum 50 INDEX?

The key sectors in the Nifty 500 Momentum 50 Index are:

Sector Representation

Sector Weight(%)

Capital Goods

30.88

Financial Services

15.99

Automobile and Auto Components

15.51

Power

10.21

Consumer Services

6.72

Services

4.71

Consumer Durables

3.93

Construction

2.92

Metals & Mining

2.77

Oil, Gas & Consumable Fuels

2.06

Realty

1.7

Healthcare

1.42

Chemicals

1.18


Source: https://www.niftyindices.com/Factsheet/FactsheetNifty500Momentum50.pdf

As of September 30, 2024

What Are the Key Stocks Available in Nifty 500 Momentum 50?

The key stocks available in the Nifty 500 Momentum 50 Index are:

Name of the Constituent

Weightage

Trent Ltd

6.72%

Bajaj Auto Limited

6.05%

Mahindra & Mahindra Ltd. 

5.04%

Adani Ports and Special Economic Zone Ltd.

4.71%

Siemens Ltd.

4.43%

Bharat Electronics Ltd.

4.36%

Hindustan Aeronautics Ltd.

3.90%

Tata Power Co. Ltd.

3.85%

REC Ltd

3.82%

Suzlon Energy Ltd. 

3.54%


Source: https://www.niftyindices.com/Factsheet/FactsheetNifty500Momentum50.pdf

As of September 30, 2024

How Has Been The Performance of NIFTY 500 Momentum 50 and Other Indices?

Given below is a comparison of the performance of Nifty 500 Momentum 50 vis-a-vis NIFTY 500.

Name of the Index

1 Year Returns

5-year Returns

Since Inception

Nifty 500 Momentum 50 Index

64.23%

33.74%

23.75%

Nifty 500

40.21%

21.02%

14.2%


Source: https://www.niftyindices.com/Factsheet/FactsheetNifty500Momentum50.pdf & https://www.niftyindices.com/Factsheet/ind_nifty_500.pdf

Returns as of September 30, 2024

The above information is only mentioned with the purpose of providing you with details of the Nifty 500 Momentum 50 Index.

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Francis Rodrigues Francis Rodrigues

Francis Rodrigues has a decade long experience in the insurance sector, and as SVP, E-Commerce and Digital Marketing, HDFC Life, manages the online sales channel, as well as digital and performance marketing. He has had hands-on experience in setting up sales channels and functional teams from scratch over a career spanning 2 decades.

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Disclaimer

In Unit Linked Policies, the investment risk in the investment portfolio is borne by the policyholder. The Unit Linked Insurance products do not offer any liquidity during the first five years of the contract. The policyholders will not be able to surrender/withdraw the monies invested in Unit Linked Insurance Products completely or partially till the end of fifth year. The name of the company, name of the brand and name of the contract does not in any way indicate the quality of the contract, its future prospects or returns.

Unit Linked Funds are subject to market risks and there is no assurance or guarantee that the objective of the investment fund will be achieved.

HDFC Life SampoornNivesh (UIN No: 101L103V03) is the name of the Unit linked, non-participating individual life insurance savings plan. HDFC Life Insurance Company Limited is only the name of the Insurance Company and HDFC Life SampoornNivesh (UIN No: 101L103V03) is only the name of the unit linked life insurance contract.

HDFC Life Smart Protect Plan (UIN: 101L175V04) is a unit linked, non-participating individual life insurance savings plan. HDFC Life Insurance Company Limited is only the name of the Insurance Company and HDFC Life Smart Protect Plan (UIN: 101L175V04) is only the name of the unit linked life insurance contract.

HDFC Life Click 2 Invest - ULIP (UIN: 101L100V05) is the name of the Unit linked, Non-Participating, Individual Life Insurance savings plan. HDFC Life Insurance Company Limited is only the name of the Insurance Company and HDFC Life Click 2 Invest - ULIP (UIN: 101L100V05) is only the name of the unit linked life insurance contract.

HDFC Life Click 2 Wealth (UIN-101L133V03) is the name of the Unit linked, Non-Participating, Individual Life Insurance savings plan. HDFC Life Insurance Company Limited is only the name of the Insurance Company and HDFC Life Click 2 Wealth (UIN-101L133V03) is only the name of the unit linked life insurance contract.

Unit Linked Insurance Products (ULIPS) are different from the traditional insurance products and are subject to the risk factors. The premium paid in the Unit Linked Life Insurance Policies is subject to investment risks associated with capital markets and the NAVs of the units may go up or down based on the performance of fund and factors influencing the capital market and the insured is responsible for his/her decisions. Please know the associated risks and the applicable charges, from your insurance agent or the intermediary or policy document of the insurer. The various funds offered under this contract are the names of the funds and do not in any way indicate the quality of these plans, their future prospects and returns.

^ Tax free wealth accumulation up to ₹2.5 lakhs along with Life Cover & 80C benefits. Please note all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws.

* HDFC Life Top 500 Momentum 50 Fund (ULIF07616/10/24Top500MoFd101)is benchmarked to Nifty 500 Momentum 50 Index. IRDAI (Actuarial, Finance and Investment Functions of Insurers), 2024 regulations and guidelines shall apply.

ARN - MC/09/24/16029

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