Introduction

Investing in index-based ETFs has gained immense popularity due to their low-cost structure, diversification benefits, and potential for high returns. Among the many options available, the Motilal Oswal Nifty 500 Momentum 50 ETF stands out as a unique investment vehicle designed to capitalize on high-momentum stocks within the Nifty 500 index.

This article provides a detailed analysis of the Motilal Oswal Nifty 500 Momentum 50 ETF, including its historical performance, investment strategy, benefits, and risks. We’ll also explore how momentum investing works and why this ETF could be a valuable addition to your portfolio.

What is the Motilal Oswal Nifty 500 Momentum 50 ETF?

The Motilal Oswal Nifty 500 Momentum 50 ETF is an exchange-traded fund that tracks the Nifty 500 Momentum 50 Index. This index consists of 50 high-momentum stocks selected from the broader Nifty 500 universe. The fund aims to deliver superior returns by investing in companies that exhibit strong price momentum.

Key Features of the ETF

• Underlying Index: Nifty 500 Momentum 50 Index
• Investment Strategy: Momentum-based stock selection
• Rebalancing Frequency: Semi-annually (June and December)
• Expense Ratio: Low-cost structure (~0.3% – 0.5%)
• Liquidity: Traded on stock exchanges like NSE and BSE

Understanding Momentum Investing

Momentum investing is a strategy that capitalizes on the continuation of existing market trends. Stocks that have shown strong upward price movements in the past are expected to continue performing well in the near future.

How the Nifty 500 Momentum 50 Index Works

1. Stock Selection: The index selects 50 stocks from the Nifty 500 based on their 6-month and 12-month price returns.
2. Weightage: Stocks are weighted based on their momentum scores, ensuring higher allocation to top performers.
3. Rebalancing: The index is rebalanced twice a year to maintain exposure to the strongest momentum stocks.

Historical Performance of the Nifty 500 Momentum 50 Index

To understand the potential of the Motilal Oswal Nifty 500 Momentum 50 ETF, let’s analyze the historical performance of its underlying index.

1. Long-Term Returns (2011-2023)

• CAGR (2011-2023): ~18.5% (outperforming Nifty 50’s ~12.5%)
• Best Year (2017): +47%
• Worst Year (2020): -15% (due to COVID-19 market crash)

2. Performance During Bull & Bear Markets

3. Risk-Adjusted Returns (Sharpe Ratio)

• Nifty 500 Momentum 50: 0.85
• Nifty 50: 0.65

The higher Sharpe ratio indicates that the momentum strategy delivers better risk-adjusted returns compared to the broader market.

Why Invest in the Motilal Oswal Nifty 500 Momentum 50 ETF?

1. Strong Historical Outperformance

The Motilal Oswal Nifty 500 Momentum 50 ETF has consistently outperformed traditional indices like the Nifty 50 and Nifty 500 over the long term.

2. Low-Cost & Passive Investing

With an expense ratio of 0.3% – 0.5%, this ETF is cheaper than actively managed funds while still delivering high returns.

3. Diversification Across Sectors

The ETF invests in 50 high-momentum stocks from various sectors, reducing concentration risk.

4. Ideal for Trend-Following Investors

If you believe in the “trend is your friend” philosophy, this ETF aligns perfectly with momentum investing strategies.

Risks & Considerations

While the Motilal Oswal Nifty 500 Momentum 50 ETF offers strong growth potential, investors should be aware of:

1. High Volatility

Momentum stocks can be more volatile than the broader market, leading to sharp declines during corrections.

2. Underperformance in Sideways Markets

Momentum strategies struggle in range-bound or choppy markets where trends are weak.

3. Sector Concentration Risk

If momentum is concentrated in a few sectors (e.g., IT or banking), the ETF may become overexposed.

Who Should Invest?

• Aggressive investors seeking high-growth opportunities.
• Long-term investors who can withstand short-term volatility.
• Passive investors looking for a low-cost, rule-based ETF.

How to Invest in the Motilal Oswal Nifty 500 Momentum 50 ETF?

1. Open a Demat & Trading Account (if you don’t have one).
2. Search for the ETF (Symbol: MOTILALOFS) on your trading platform.
3. Place an Order (Lump-sum or SIP).
4. Monitor & Rebalance periodically.

FAQs About Motilal Oswal Nifty 500 Momentum 50 ETF

1. What is the expense ratio of this ETF?

The expense ratio is 0.3% – 0.5%, making it cost-effective.

2. How often is the index rebalanced?

The Nifty 500 Momentum 50 Index is rebalanced semi-annually (June & December).

3. Does this ETF pay dividends?

No, this is a growth-oriented ETF, and returns are primarily through capital appreciation.

4. Can I invest via SIP?

Yes, many brokers allow SIP investments in ETFs.

5. How does it compare to Nifty 50 ETFs?

It has historically outperformed Nifty 50 ETFs due to its momentum-based strategy.

6. Is this ETF suitable for conservative investors?

No, it’s better suited for moderate to high-risk investors.

Conclusion

The Motilal Oswal Nifty 500 Momentum 50 ETF is a compelling investment option for those looking to capitalize on high-growth momentum stocks. With a strong historical track record, low costs, and a disciplined investment approach, this ETF can be a valuable addition to a well-diversified portfolio.

However, investors must be prepared for higher volatility and should consider their risk tolerance before investing. If you believe in momentum investing and seek long-term growth, the Motilal Oswal Nifty 500 Momentum 50 ETF is worth exploring.

For expert financial insights, visit Rich Path. and start your investment journey today! 🚀

Read more –

Top 5 Mutual Funds for Long-Term Growth in India in 2025

Best Mutual Funds: How to Choose – A Complete Guide

Best Flexi Cap Mutual Funds to Invest in 2025