Momentum Investing is a strategy based on the empirical observation that assets which have outperformed their peers over a recent period (typically 3–12 months) tend to continue outperforming in the near future, while underperformers tend to continue lagging. Momentum investors buy recent winners and avoid or short recent losers, rotating capital into strength. Academic research has confirmed momentum as a persistent factor in global equity returns, alongside value and quality. In India, SEBI-regulated momentum factor funds and PMS strategies systematically implement this approach. The strategy's primary risk is in sharp market reversals momentum portfolios can suffer severe drawdowns when market leadership rotates suddenly, as seen in factor crashes following major macro shocks.
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