Evaluate funds on rolling returns over long term

My spouse and I went to a concert held in Worli in mid-town Mumbai. We started in separate cars from Bandra.

- HARSH ROONGTA

My spouse took the Bandra-Worli Sea Link, while I was forced to take the old route as I needed to pick up a friend from Shivaji Park. Both of us assumed that my spouse would reach faster. However, she got stuck in a traffic jam at the Sea Link exit.

Consequently, she arrived much later than I did despite taking the "faster" route. However, we both agreed that she would have reached faster via the Sea Link under normal circumstances.

I shared this experience with my client Rohan, whose bank manager had pitched a passive fund replicating the Nifty 200 Momentum 30 Index (MI). MI consists of 30 high-performing stocks from the prior year, chosen according to a specified formula. The momentum style is based on the premise that stocks with strong past returns are likely to perform well in the future. The sales brochure highlighted MI's 64 per cent annual return for the year ended October 1, 2024, outperforming the Nifty 50 Total Return Index (TRI), which returned 34 per cent. Thus, MI outperformed the Nifty 50 by an "extra" 30 percentage points over that one-year period.