Want to ride on earnings momentum for long-term wealth creation? Manasvi Shah of ICICI Prudential AMC explains
In an interaction with Business Today, Manasvi Shah, Fund Manager, ICICI Prudential AMC explains how momentum funds can help investors to create wealth, and the strategy is different from others.
- Aug 11, 2025,
- Updated Aug 11, 2025 2:56 PM IST
At a time when economies are grappling with uncertain global cues, ICICI Prudential Asset Management Company (AMC) recently launched Active Momentum Fund with an objective to capatilise on the continuance of existing trends (price trends or earnings trends) in the market. In an interaction with Business Today, Manasvi Shah, Fund Manager, ICICI Prudential AMC explains how momentum funds can help investors to create wealth, and the strategy is different from others. Edited excerpts:
How ICICI Prudential AMC’s Active Momentum Fund can help investors to accumulate wealth? What is the recommended investment horizon for this fund?
The fund is built on an earnings-revision-based momentum strategy, which historically has proven to outperform the broader market over time. By focusing on companies and sectors showing sustained earnings momentum, the fund aims to deliver better risk-adjusted returns. As this is a style that has historically proven to work across market cycles, it is best suited for investors with a long-term investment horizon.
How does the momentum strategy differs from traditional growth or value investing approaches?
Unlike traditional value or growth strategies, which focus on valuation multiples or secular growth prospects, this fund leans into earnings momentum. It aims to identify stocks where earnings have seen upward revisions vs expectations. This momentum strategy approaches valuations from the lens of re-rating or de-rating, driven by earnings revisions rather than looking at valuations as an absolute level. The idea is to invest in a stock across the cycle till the earnings trends reverse.
Can you explain the process used to identify stocks for the fund? Is it purely quantitative, or are there qualitative filters too?
The fund uses a blend of quantitative screening and fundamental analysis. The quantitative screening uses our in-house model enabling us to filter stocks which have seen earnings revisions or upgrades in the recent quarters; hence focus is on earnings momentum, rather than purely price trends or speculative moves. At the same time, this is an actively run fund which means we will act on triggers/ events, that impact the future earnings momentum of a stock or sector. We are also looking to leverage in-house research to distinguish between sustainable earnings trends from those that are too temporary.
Does the fund follow sector rotation actively, or is the focus only on stock-level momentum?
The fund uses a blend of bottom-up (stock-level) and top-down (sector-level) approaches. While earnings momentum at the stock level is key, sector trends are not ignored. The strategy aims to adjust to changing trends, enabling sector rotation when supported by strong earnings revisions.
How frequently does the fund churn the portfolio? What is the typical holding period of stocks?
Given that this is an actively run fund and not a smart-beta or quant fund, there is no concept of a fixed rebalancing cycle. Compared to pure price momentum funds which typically have high churn, this fund aims to benefit from the more stable nature of earnings trends, potentially leading to lower portfolio turnover as compared to pure price-based momentum funds.
The domestic benchmark indices declined for the sixth straight week ended August 8, 2025, marking the longest losing streak since the Covid-19 crash of April 2020. How is the fund structured to handle such market corrections?
The fund focuses on earnings momentum, rather than price momentum, making it more resilient during market corrections. In the initial phase of market correction, all stocks correct simultaneously. Later over an entire down cycle, the stocks that tend to outperform are those where earnings momentum is stronger, which is where the strategy is aligned. Additionally, the fund has the flexibility to increase cash allocations if earnings momentum across the board turns negative. This dual approach helps cushion drawdowns.
What is the portfolio construction process of the momentum fund? How many stocks the fund has at present?
The portfolio construction is currently underway. Over time, we could have a concentrated portfolio of 35-50 stocks, which are sector as well as market capitalisation agnostic. The focus is to pick companies or sectors which have seen an upward earnings revision trend, while also having certain stocks where we expect earnings momentum to pick up soon, due to certain positive triggers or depending on where they are in an earnings or industry cycle. A higher weightage within the portfolio will be allocated to names where we pick trends relatively early or where we have high conviction on the earnings trend.
What is your current view on market momentum in India? Are there any sectors or themes that are showing strong trends right now?
While earnings growth is slowing down across sectors and market caps over the last few quarters, there are still pockets of stocks as well as sectors where momentum in earnings is quite robust. Some of the sectors where we see continued momentum includes telecom, non-banking financial services, sub-sectors catering to power T&D capex etc.
Are you finding more opportunities in mid and small caps or large caps at this stage of the market cycle?
The fund is completely agnostic to market capitalisation and the benchmark is Nifty 500, enabling this flexible approach. Over the recent few quarters, mid and small caps have witnessed larger downward revision in earnings as compared to large caps. So, momentum is better in large caps.
How is the fund positioned to navigate global macro uncertainties?
The fund takes into account macro and micro triggers that could impact a company’s or sector’s earnings. Its active management and flexible structure enable it to respond swiftly to such events, positioning the portfolio to adjust as the momentum shifts.
At a time when economies are grappling with uncertain global cues, ICICI Prudential Asset Management Company (AMC) recently launched Active Momentum Fund with an objective to capatilise on the continuance of existing trends (price trends or earnings trends) in the market. In an interaction with Business Today, Manasvi Shah, Fund Manager, ICICI Prudential AMC explains how momentum funds can help investors to create wealth, and the strategy is different from others. Edited excerpts:
How ICICI Prudential AMC’s Active Momentum Fund can help investors to accumulate wealth? What is the recommended investment horizon for this fund?
The fund is built on an earnings-revision-based momentum strategy, which historically has proven to outperform the broader market over time. By focusing on companies and sectors showing sustained earnings momentum, the fund aims to deliver better risk-adjusted returns. As this is a style that has historically proven to work across market cycles, it is best suited for investors with a long-term investment horizon.
How does the momentum strategy differs from traditional growth or value investing approaches?
Unlike traditional value or growth strategies, which focus on valuation multiples or secular growth prospects, this fund leans into earnings momentum. It aims to identify stocks where earnings have seen upward revisions vs expectations. This momentum strategy approaches valuations from the lens of re-rating or de-rating, driven by earnings revisions rather than looking at valuations as an absolute level. The idea is to invest in a stock across the cycle till the earnings trends reverse.
Can you explain the process used to identify stocks for the fund? Is it purely quantitative, or are there qualitative filters too?
The fund uses a blend of quantitative screening and fundamental analysis. The quantitative screening uses our in-house model enabling us to filter stocks which have seen earnings revisions or upgrades in the recent quarters; hence focus is on earnings momentum, rather than purely price trends or speculative moves. At the same time, this is an actively run fund which means we will act on triggers/ events, that impact the future earnings momentum of a stock or sector. We are also looking to leverage in-house research to distinguish between sustainable earnings trends from those that are too temporary.
Does the fund follow sector rotation actively, or is the focus only on stock-level momentum?
The fund uses a blend of bottom-up (stock-level) and top-down (sector-level) approaches. While earnings momentum at the stock level is key, sector trends are not ignored. The strategy aims to adjust to changing trends, enabling sector rotation when supported by strong earnings revisions.
How frequently does the fund churn the portfolio? What is the typical holding period of stocks?
Given that this is an actively run fund and not a smart-beta or quant fund, there is no concept of a fixed rebalancing cycle. Compared to pure price momentum funds which typically have high churn, this fund aims to benefit from the more stable nature of earnings trends, potentially leading to lower portfolio turnover as compared to pure price-based momentum funds.
The domestic benchmark indices declined for the sixth straight week ended August 8, 2025, marking the longest losing streak since the Covid-19 crash of April 2020. How is the fund structured to handle such market corrections?
The fund focuses on earnings momentum, rather than price momentum, making it more resilient during market corrections. In the initial phase of market correction, all stocks correct simultaneously. Later over an entire down cycle, the stocks that tend to outperform are those where earnings momentum is stronger, which is where the strategy is aligned. Additionally, the fund has the flexibility to increase cash allocations if earnings momentum across the board turns negative. This dual approach helps cushion drawdowns.
What is the portfolio construction process of the momentum fund? How many stocks the fund has at present?
The portfolio construction is currently underway. Over time, we could have a concentrated portfolio of 35-50 stocks, which are sector as well as market capitalisation agnostic. The focus is to pick companies or sectors which have seen an upward earnings revision trend, while also having certain stocks where we expect earnings momentum to pick up soon, due to certain positive triggers or depending on where they are in an earnings or industry cycle. A higher weightage within the portfolio will be allocated to names where we pick trends relatively early or where we have high conviction on the earnings trend.
What is your current view on market momentum in India? Are there any sectors or themes that are showing strong trends right now?
While earnings growth is slowing down across sectors and market caps over the last few quarters, there are still pockets of stocks as well as sectors where momentum in earnings is quite robust. Some of the sectors where we see continued momentum includes telecom, non-banking financial services, sub-sectors catering to power T&D capex etc.
Are you finding more opportunities in mid and small caps or large caps at this stage of the market cycle?
The fund is completely agnostic to market capitalisation and the benchmark is Nifty 500, enabling this flexible approach. Over the recent few quarters, mid and small caps have witnessed larger downward revision in earnings as compared to large caps. So, momentum is better in large caps.
How is the fund positioned to navigate global macro uncertainties?
The fund takes into account macro and micro triggers that could impact a company’s or sector’s earnings. Its active management and flexible structure enable it to respond swiftly to such events, positioning the portfolio to adjust as the momentum shifts.