-2% to 24%: Why momentum fund returns differ

Momentum investing is a strategy that focuses on price strength, disregarding valuations, growth, and earnings visibility. Several active momentum funds have outperformed their benchmarks, with returns ranging from a low of -2.14% to a high of 23.9%. However, outcomes within the momentum fund universe are highly varied. For instance, Motilal Oswal Active Momentum Fund delivered a remarkable 23.9% return, while Axis Momentum Fund and Samco Active Momentum lagged behind with -2.14% and 0.5%, respectively.

Index-based momentum funds, on the other hand, have suffered amid an extended lull in the market, with returns averaging 1.8% over the same period. Active momentum funds can still thrive by identifying shifts in sector leadership and quickly rotating out of weakening positions. The nature of market movements, rather than the broader market's performance, largely determines the success of momentum strategies in a range-bound market.