Factor Investing | 29 Aug 2024
Recently, more Indians have begun investing in factor funds, a relatively lesser-known investment option, as awareness of this stock selection strategy grows.
- Assets under management in this category surged more than 3 times between 2023 and 2024, highlighting a significant increase in investor interest.
- Factor-Based Investing Strategy:
- About:
- Factor investing involves targeting specific drivers of return (factors) like size, value, momentum, growth, low volatility, and quality across asset classes.
- In India, the evolution of factor investing has moved from basic indices like Sensex and Nifty to more specialised single-factor funds that emphasise qualities such as quality, value, alpha, and momentum.
- Advantage:
- These help improve portfolio returns, reduce volatility and enhance diversification.
- Examples:
- Strategic indices on the National Stock Exchange (NSE) include Nifty50 Value 20 and Nifty200 Momentum 30.
- Performance:
- These have significantly outperformed the benchmark Nifty 50 in 2024, achieving returns between 15-38%, compared to the Nifty 50's 12% increase.
- About:
