Nifty Midcap150 Momentum 50: This index combines mid-cap potential with momentum factor

Mid-cap stocks are known for having a higher growth potential than large-cap stocks. On the other hand, the strategy focuses on stocks that are already showing strong price performance and are expected to continue to perform well in the future.

The Nifty Midcap150 Momentum 50 Index brings these two ideas together. It includes 50 mid-cap stocks that have delivered the strongest momentum, thereby combining the growth potential of mid-caps with the momentum factor’s ability to identify market leaders.

So, let’s understand what the Nifty Midcap150 Momentum 50 Index is, how it has performed historically, and how you can invest in it.

What is Nifty Midcap150 Momentum 50 Index?

The Midcap150 Momentum 50 Index is designed to capture the performance of high-momentum mid-cap stocks.

It selects 50 companies from the Nifty Midcap 150 Index based on their risk-adjusted returns over the previous 6 and 12 months. By focusing on stocks with strong price trends, the index aims to benefit from the momentum factor.

This index directly helps you invest in the top 50 mid-cap stocks with strong momentum as compared to the broader Nifty indices.

Returns of Nifty Midcap150 Momentum 50 Index Vs Nifty Indices

When you compare the returns of the Nifty Midcap150 Momentum 50 Index with other Nifty indices over the years, this momentum index has clearly outperformed them.

Suppose you had invested ₹1 lakh in the Nifty Midcap150 Momentum 50 Index 10 years ago. Based on its historical 10-year returns of 23.38%, your total investment value will reach ₹8.17 lakh today.

In comparison, the same investment in the Nifty Midcap150 Index, which is the parent index, would have grown to about ₹6.3 lakh.

Meanwhile, a ₹1 lakh investment in broader market indices such as the Nifty 200 and Nifty 500 would have grown to ₹4.3 lakh and ₹4.4 lakh, respectively.

Additionally, the Nifty Midcap150 Momentum 50 Index has outperformed both the Nifty Midcap150 Index and the broader market indices over the 3-year and 5-year periods as well.

This suggests that by combining the growth potential of mid-cap stocks with a momentum-based stock selection strategy, this index has historically generated superior returns compared to traditional market cap-weighted indices.

Risk-to-return ratio of Nifty Midcap150 Momentum 50 Index Vs Nifty Indices

The risk-return ratio helps in evaluating whether the returns generated by an investment adequately compensate for the level of risk involved. Generally, a lower ratio indicates a more favourable balance between risk and reward, while a higher ratio suggests that investors are taking on greater risk relative to the returns they may earn.

Over the years, the Nifty Midcap150 Momentum 50 Index recorded a higher risk-reward ratio than Nifty Midcap150, Nifty 200, and Nifty 500. This suggests that investors in the momentum index had to take on relatively higher risk to earn the returns generated by the strategy.

How to invest in the Nifty Midcap150 Momentum 50 Index?

While investing in this index by selecting all 50 stocks in the same weightage can be difficult, you can easily gain exposure to the Nifty Midcap150 Momentum 50 Index through ETFs and that track it.

Here is a list of the available index funds and ETFs, ranked by AUM.

These index funds or ETFs provide a ready-made portfolio of high-momentum mid-cap stocks, making it a convenient option for investors seeking long-term wealth creation through passive investing.

Disclaimer: This is purely for educational/ informational purposes and should not be taken as any sort of investment advice. Always consult a SEBI-registered advisor before making any investment decisions.