1. Executive Intelligence & Strategic Landscape

The landscape of factor-based investing in the Indian equity market has undergone a profound structural transformation. Historically dominated by passive smart beta indices—most notably the Nifty 200 Momentum 30 and the Nifty 500 Momentum 50—the asset management industry has increasingly pivoted toward actively managed momentum and quantitative mutual funds. This shift represents an acknowledgment of the inherent limitations of passive momentum strategies, which often suffer from rebalancing lags, elevated drawdowns during market regime shifts, and a rigid reliance on pure price action without fundamental validation.

This comprehensive research report provides an exhaustive, nuanced evaluation of the leading active momentum and quantitative mutual funds in India as of February 2026. The analysis systematically deconstructs their proprietary investment models, stock selection criteria, historical effectiveness, risk metrics, and the verifiable track records of their respective fund managers. Furthermore, the report categorizes these vehicles based on their predictive capacity to outperform the benchmark across varying market cycles, optimize absolute returns, and actively manage portfolio volatility.

Axis Momentum Fund

Launched during its New Fund Offer (NFO) period in November-December 2024, the Axis Momentum Fund operates on the foundational principle of "keeping a winning streak going," drawing an analogy to a cricket batsman in peak form.

Investment Style and Stock Selection Criteria: The fund's philosophy is metaphorically tied to Newton's First Law of Motion: an object in motion stays in motion unless acted upon by an external force. The strategy relies on a model-based approach that aims to maximize momentum exposure based on various price trend parameters. To manage the inherent risks of pure price momentum, the model utilizes specific risk factors, including portfolio constraints, stringent liquidity requirements, and an optimized rebalancing frequency to manage sector and stock concentration. The fund explicitly targets an unconstrained equity allocation (up to 100.25% deployed in equities), with a notable bias toward large-cap equities (55.83%) and prominent holdings in the financial services and capital goods sectors.

Fund Manager Pedigree and Operational Metrics: The fund is co-managed by Karthik Kumar and Mayank Hyanki. Karthik Kumar, who has managed the scheme since its inception, oversees a total of 25 schemes for Axis Mutual Fund. His professional history is deeply rooted in algorithmic and alternative strategies, having previously worked as a Portfolio Manager at SilverTree Hong Kong and Asiya Investment. As of February 2026, the Axis Momentum Fund commands an Asset Under Management (AUM) of ₹1,094.87 Crores. The fund operates with a highly competitive Direct Plan expense ratio of 0.71%. The quantitative model requires highly active management, reflected in a substantial portfolio turnover ratio of 153.00%. Despite its sophisticated modeling and experienced management, the fund's early track record has been challenging. It has delivered a negative Compound Annual Growth Rate (CAGR) of -6.20% since its launch, with a 1-year trailing return of 5.10%, significantly underperforming the broader Nifty 500 TRI benchmark's 8.00% return over the same period.

ICICI Prudential Active Momentum Fund

Introduced to the market in July 2025, the ICICI Prudential Active Momentum Fund differentiates itself by rejecting the premise that momentum is solely a function of historical price action.

Investment Style and Stock Selection Criteria: The fund's core thesis integrates "Earnings Momentum" alongside traditional "Price Momentum". The strategy recognizes that while price momentum is driven by market sentiment, momentum backed by fundamental earnings growth is significantly more sustainable. The stock selection universe is drawn from the broader market, and the quantitative screens heavily weight consensus analyst estimates. beating quarterly estimates, and receiving multiple consensus earnings upgrades. Furthermore, the algorithm utilizes both top-down macro analysis and bottom-up stock picking, allowing the fund to automatically pivot its style exposure based on prevailing market trends.

Fund Manager Pedigree and Operational Metrics: The scheme is managed by Manasvi Shah alongside Sharmila D'Silva. Manasvi Shah brings over 9 years of experience within ICICI Prudential, having joined the AMC in 2015. Her experience in asset allocation and risk management within hybrid funds translates into the Active Momentum Fund's cautious, earnings-backed approach. As of February 2026, the fund has amassed an impressive AUM of ₹1,448.27 Crores. The Direct Plan operates with an expense ratio of 1.04%. Since its inception, the fund has navigated market volatility effectively, generating an annualized return of approximately 8.3% and a 6-month absolute return of 4.6%.

Kotak Active Momentum Fund

Launched in August 2025, the Kotak Active Momentum Fund explicitly operates on the thesis that "Price Has Been A Slave Of Earnings".

Investment Style and Stock Selection Criteria: The fund deploys a proprietary "Enhanced Earnings Factor Model". Rather than relying strictly on backward-looking price charts, the model attempts to anticipate and capture momentum early by identifying positive earnings surprises and analyst upgrade cycles. The investible universe is systematically derived from the top 250 stocks by total market capitalization within the Nifty 500 Index. Before applying momentum scores, the model applies strict exclusion criteria to eliminate highly illiquid stocks, companies lacking sufficient analyst coverage, and corporations exhibiting excessive leverage. By focusing on earnings revisions, the fund attempts to enter momentum trades earlier than pure price-action funds.

Fund Manager Pedigree and Operational Metrics: The fund is managed by Rohit Tandon, an industry veteran with over 19 years of deep experience in equity research and fund management. Tandon's historical success is evident in his management of the Kotak Balanced Advantage Fund and Kotak Large Cap Fund, where he has navigated multiple market cycles. As of February 2026, the Kotak Active Momentum Fund holds an AUM of ₹1,340.30 Crores. The fund maintains an efficient Direct Plan expense ratio of 0.78%. In its relatively short operational history, the fund has delivered a stable CAGR of 5.21% since inception.

Motilal Oswal Active Momentum Fund

The Motilal Oswal Active Momentum Fund, launched in March 2025, takes a diametrically opposed view to the earnings-focused models, opting for a highly aggressive, pure-price strategy.

Investment Style and Stock Selection Criteria: The fund operates on the rigid principle that "Price is Paramount". The fund deploys an adaptive and agile proprietary momentum strategy based on an interpretation of the AMC's well-known QGLP (Quality, Growth, Longevity, Price) framework. While the universe begins with the Nifty 500, a comprehensive filtering process is applied to exclude stocks with highly unfavorable fundamentals. The core defining feature is its agility; it employs a strict Monthly Portfolio Rebalancing schedule.

Fund Manager Pedigree and Operational Metrics: The fund is managed by Ajay Khandelwal, Varun Sharma, and Vishal Ashar. Khandelwal brings 14 years of experience and has a formidable track record in generating massive alpha in aggressive equity segments. Due to its monthly rebalancing mandate, the fund exhibits an extreme portfolio turnover ratio of 266.00%. Consequently, the fund carries a very high Direct Plan expense ratio of 2.56%. However, this aggressive strategy has yielded impressive results, boasting a return since launch of 18.13% to 18.8%, and currently managing an AUM of ₹360.18 Crores.

Nippon India Active Momentum Fund

Launched in February 2025, the Nippon India Active Momentum Fund represents the cutting-edge evolution of multi-factor conditional modeling.

Investment Style and Stock Selection Criteria: The fund's model attempts to achieve an optimal blend of technical indicators (Price Momentum) and fundamental factors (Earnings Revision). Its core differentiator is the algorithmic deployment of "Conditional Factors"—specifically Beta and Minimum Volatility. When market breadth is low (<25%), the fund intentionally adds high Beta factors. Conversely, when market breadth is overheated (>85%), the fund overrides pure momentum signals and introduces Minimum Volatility factors. This structural toggle dynamically derisks the portfolio. The fund operates with a 30-day rebalancing frequency to remain agile.

Fund Manager Pedigree and Operational Metrics: Managed by Ashutosh Bhargava. As the Head of Equity Research at Nippon India, Bhargava possesses a deep understanding of cyclicality and risk management. The fund manages an AUM of ₹338.26 Crores and operates with a highly efficient Direct Plan expense ratio of 0.69%. The strategy has generated a highly impressive CAGR of 21.10% since inception.

Quant Momentum Fund

The Quant Momentum Fund, launched in November 2023, is built upon highly advanced mathematical modeling, behavioral finance, and non-linear data analytics.

Investment Style and Stock Selection Criteria: The fund aims to "Decode the DNA of market randomness". Rather than chasing standard price trends, the model focuses heavily on "Idiosyncratic Momentum"—a distinct phenomenon that explicitly strips out the effects of established asset pricing factors like market beta, size, and value. Furthermore, the broader Quant AMC utilizes its proprietary VLRT (Valuation, Liquidity, Risk Appetite, Time) framework to capitalize on market volatility, actively exploiting the emotional decisions of other participants.

Fund Manager Pedigree and Operational Metrics: Managed by a bench of experts including Sandeep Tandon and Ankit Pande. As of February 2026, the fund holds an AUM of ₹1,321.27 Crores. The Direct Plan expense ratio is 1.03%. While the fund boasts a strong return since launch of 18.06%, its high-turnover models have occasionally struggled during recent narrow-market phases, resulting in a 1-year trailing return of 8.70% to 9.93%.

360 ONE Quant Fund

Operating since November 2021, the 360 ONE Quant Fund (formerly IIFL Quant) is one of the most mature active quantitative strategies in the Indian market.

Investment Style and Stock Selection Criteria: The fund employs a S.M.A.R.T strategy using constraint-based single-factor optimization. Crucially, before momentum scores are applied, the algorithm screens the universe using a proprietary SCDV framework (Secular, Cyclical, Defensive, Value Traps). By algorithmically filtering out "Value Traps," the fund ensures momentum scoring is only applied to fundamentally sound businesses, vastly reducing the risk of buying into speculative bubbles.

Fund Manager Pedigree and Operational Metrics: Managed by Parijat Garg, a highly specialized quantitative researcher with over 15 years of experience in algorithmic trading. The fund manages an AUM of ₹876.75 Crores with a highly efficient Direct Plan expense ratio of 0.61%. The fund has delivered a stellar 1-year return of 20.77% and an exceptional 3-year CAGR of 27.36%.

Samco Active Momentum Fund

Launched in June 2023, the Samco Active Momentum Fund relies on a proprietary algorithm designed to identify stocks showing technical breakouts and price leadership. Managed by Nirali Bhansali, the fund currently holds an AUM of ₹662.80 Crores. The fund's implementation appears highly passive, evidenced by an unusually low portfolio turnover ratio of 5.35%. This lack of agility has resulted in severe underperformance, with deeply negative 1-year returns ranging from -8.01% to -11.38%.

DSP Quant Fund

Launched in June 2019, the DSP Quant Fund utilizes a rule-based model constructed on "Good Investing Principles". The algorithmic screener eliminates fundamentally weak stocks, subsequently scoring the remaining equities based on a multifactor overlay of growth, quality, and value parameters. Managed by Anil Ghelani and Aparna Karnik, the fund holds an AUM of ₹848.39 Crores with a low Direct Plan expense ratio of 0.55%. The fund has delivered a stable, if unspectacular, 1-year return of 8.19% and a 3-year CAGR of 12.50%.

The Mathematical Reality of Momentum Volatility: By its very mathematical definition, momentum investing systematically allocates capital toward assets that have already appreciated, often pushing portfolios into higher valuation multiples. Consequently, true momentum portfolios naturally exhibit a Beta significantly greater than 1.0 during bull market phases. However, the exact mechanism that generates alpha on the upside creates severe vulnerability on the downside—a phenomenon known as a "momentum crash".

Active Risk Mitigation vs. Empirical Reality: Active funds explicitly design their algorithms to curb this structural volatility. Nippon India's inclusion of Minimum Volatility conditional factors and 360 ONE's SCDV framework are direct algorithmic countermeasures. Despite these sophisticated interventions, momentum remains a "Very High Risk" category. The negative absolute returns witnessed in funds like Samco Active Momentum and Axis Momentum validate that when active momentum algorithms misinterpret market rotations, the downside is immediate and severe.

1. Funds with the Potential to Beat the Nifty 500 Momentum 50

A. In a Pure Bull Market: Motilal Oswal Active Momentum Fund and Quant Momentum Fund. In a pure, uninterrupted bull market, their extreme agility and focus on liquidity allow them to compound winners exponentially faster than passive indices.

B. Over a Total Complete Market Cycle: 360 ONE Quant Fund and Kotak Active Momentum Fund. By systematically filtering out "Value Traps" or demanding earnings validation, these funds possess structural mechanisms to preempt price decay during market corrections.

2. Funds with the Potential to Generate Maximum Absolute Returns

Motilal Oswal Active Momentum Fund and Quant Momentum Fund. For investors purely seeking maximum absolute capital appreciation, these funds’ willingness to aggressively chase pure price trends or idiosyncratic bets offers the highest theoretical ceiling, provided the investor can stomach the volatility.

3. Funds with the Potential to Generate Maximum Returns with Least Volatility

Nippon India Active Momentum Fund and 360 ONE Quant Fund. Nippon India represents the most sophisticated algorithmic attempt to solve volatility via conditional factors, while 360 ONE's empirical data supports its position as a leader in high-conviction, low-volatility quantitative momentum.

4. Funds Likely to Underperform or Hug the Benchmark

Samco Active Momentum Fund and Axis Momentum Fund. Samco's abnormally low turnover ratio suggests a static algorithm that defeats the purpose of an active mandate. Axis Momentum lacks the sophisticated fundamental overlays seen in category leaders, making it likely to act as an expensive proxy over time.

The evolution of active momentum and quantitative funds in the Indian capital market highlights a critical maturation in factor investing. Passive momentum indices expose investors to unacceptable levels of high-beta drawdowns during sudden macroeconomic regime shifts.

The future of successful momentum investing lies not in pure price-chasing, but in multi-factor conditional modeling and fundamental validation. Funds that rely purely on historical price action (such as Motilal Oswal) will generate maximum absolute returns during euphoria but will subject investors to severe volatility. Conversely, algorithms that demand fundamental validation (specifically Kotak and 360 ONE) offer vastly superior risk-adjusted durability across complete market cycles.

Ultimately, the Nippon India Active Momentum Fund represents the most structurally sound approach for risk-conscious investors. Investors must meticulously align their vehicle selection not merely with a desire for absolute returns, but with their psychological tolerance for the inherent volatility that defines the momentum factor.