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Disciplined buying and nimble selling is the hallmark of investors who create and retain wealth. That’s exactly what the new Union Active Momentum Fund aims to achieve with its momentum screeners guiding buy and sell decisions and an active overlay to respond nimbly when required to exit positions based on developments critical to particular stocks.
While smart beta passives focus only on price momentum, this active momentum fund also considers other technical factors/indicators beyond price as inputs into its proprietary momentum model to guide buy and sell decisions.
There are no sector caps for this fund, and since its universe is the top 1000 names, there can be a small cap tilt to this fund too– which makes it different from other momentum based strategies. Sanjay says liquidity filters will weed out illiquid stocks as a risk management measure.
Back-testing data for this model shows considerable outperformance over the Nifty 500 Momentum 50 index, and this index anyway has outperformed Nifty 500. Sanjay attributes his model’s outperformance to the nimble exit decisions that get triggered by the model – rather than waiting for quarterly/semi-annual rebalancing periods.
