Momentum Funds: Can Your SIP Handle the Swings?
Momentum-based index funds pick stocks that have risen the most recently. They can outperform in bull markets but crash harder when sentiment turns. Here is what every SIP investor should know before jumping in.
A 30% drawdown on ₹5L invested = ₹1.5L gone — more than 6 months of chai!
Your index fund may now chase winners — but at higher risk
Key Takeaways
Check if any of your existing SIPs are in momentum or factor-based funds — review their 1-year drawdown history before adding more money.
Compare momentum index funds against plain Nifty Midcap 150 index funds on expense ratio, tracking error, and volatility before choosing one.
Limit momentum fund allocation to 10-15% of your equity portfolio — never replace your core large-cap or flexi-cap SIP with a momentum fund.
Momentum-based index funds pick stocks that have risen the most recently. They can outperform in bull markets but crash harder when sentiment turns. Here is what every SIP investor should know before jumping in.
Here's what happened: The Nifty Midcap150 Momentum 50 Index tracks 50 mid-cap stocks ranked by recent price performance, blending mid-cap growth with momentum-factor investing.. Momentum investing bets that stocks rising strongly will continue rising — but the strategy flips sharply when markets reverse, causing steep short-term losses.. Several mutual funds already offer momentum-based index schemes, and interest is growing among young Indian retail investors chasing above-average returns..
What you should do: Check if any of your existing SIPs are in momentum or factor-based funds — review their 1-year drawdown history before adding more money.. Compare momentum index funds against plain Nifty Midcap 150 index funds on expense ratio, tracking error, and volatility before choosing one.. Limit momentum fund allocation to 10-15% of your equity portfolio — never replace your core large-cap or flexi-cap SIP with a momentum fund..
Momentum funds rebalance their portfolio every 6 months — this triggers capital gains tax twice a year inside the fund, subtly reducing your net returns compared to a buy-and-hold index fund.
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- [1]“Nifty Midcap150 Momentum 50: This index combines mid-cap potential with momentum factor” mint - money · 8 Jun 2026
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