Just finished reading Stocks on the Move by Andreas Clenow. After reading the book and seeing the yearwise performance from 1999 till 2014, the conviction over this investment stratrgy is definately increased. Still some apprehensions…
Currently we have momemtum funds in three different universes…
- UTI nifty 200 momentum 30 fund
- Tata Midcap 150 momentum 50 fund
- A NFO of Motilal in the process Motilal Nifty 500 momentum 50
So now we have 3 funds with different universes using this strategy. The only problem is , all these 3 funds have 6-monthly re-balancing frequency. And in 6 months, many things can change. I have checked charts of the stocks in their portfolio and there are many stocks under consolidation or even in down trend, as the next rebalancing will happen in December. Till that time, they cant change the stocks. Being DIY, I can apply weekly rebalaning also and capture the changes promptly.
But with current budget , our short term capital gain is now 20% and then we have transaction costs, while in case of mutual funds, being trust entities , Capital gain tax doesnt apply to them.
Now only issue is how much of drawback of 6 month rebalancing will affect their performance and how much of it will be compensated by being tax efficient.
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