Is it possible to beat Nifty50 over a 10-15 year period without spending hundreds of hours researching on stocks or mutual funds to invest in?
A passive ETF which beats Nifty and has low underperformance during corrections.
A thread with analysis 🧵👇🏻
(1/n)

Enter Nifty200 Momentum30 index! The Nifty200 Momentum 30 Index aims to track the performance of 30 high momentum stocks across large and mid-cap stocks.
And this index has handsomely outperformed Nifty over all major timeframes with comparable levels of drawdown during market corrections.
(2/n)

Before looking at the upside, let's look at the downside.
I have plotted a comparison of the drawdown for Nifty50 and Nifty200 Momentum30 index for nearly 20 years.
You can observe that Nifty200 Momentum30 index has closely tracked the drawdowns of Nifty50 for the last 10 years.
(3/n)

During the last 3 bear markets, Nifty200 Momentum30 index has performed in-line with Nifty.
You'll be amazed to see that the Nifty200 Momentum30 index actually had a lower drawdown than Nifty50 during the Covid crash of 2020!
(4/n)

Nifty200 Momentum30 index has outperformed Nifty50 in 7 out of the last 10 years.
In years of major bull runs such as 2014, 2017, 2021, 2023 the Nifty200 Momentum30 index has beaten Nifty by at least 15% every time.
(5/n)

Nifty200 Momentum30 Index Methodology
• The index tracks the performance of the stocks that are part of the Nifty 200 index, and have high Normalized Momentum Scores
• The Normalized Momentum Score is based on 6-month and 12-month price return, adjusted for volatility
• Stock weights are capped at the lower of 5% or 5 times the weight of the stock in the index based only on free float market capitalization
Reconstitution
• Index rebalancing is done on a semi-annual basis in June and December
• Stocks that move out of the Nifty 200 shall also move out of the Nifty200 Momentum 30 Index at the time of the review of the Nifty200 Momentum 30 Index
One big caveat for the Nifty200 Momentum30 Index is that it was launched by NSE only on August 25, 2020 which means that the prior data is backtested based on the construction methodology of the index.
(6/n)

How can you invest in Nifty200 Momentum30 index?
I'm aware of 3 AMCs which have ETFs tracking the Nifty200 Momentum30 index.
1. UTI
2. Motilal Oswal
3. HDFC
Disclosure: I'm invested in Motilal Oswal ETF with ~4% of portfolio at CMP
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