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A smart way to outperform marketsVandana Trivedi, Axis MF, Mumbai

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Axis MF has launched a smart beta factor based equity fund – Nifty 500 Value 50 Index Fund, which offers investors a passive strategy to invest into the value style and ideally complements its actively managed suite of equity funds which focus more on the quality style of investing.

Stocks in this index are chosen on the basis of lower P/E, lower P/B and higher dividend yields – all classic value investing metrics.

This index has outperformed the broad market handsomely over the last 10 years – which of course includes the last 3 years when value significantly outpaced the market.

Axis MF offers a FoF which includes value, quality, momentum and low volatility – all the 4 key factor based funds that cover the entire market. Interestingly, this combination of all 4 factors has outperformed the broad market by a healthy 3% CAGR over the last decade.

Though of more recent vintage, factor based smart beta funds are gaining significant traction among retail and HNI investors. Momentum funds are the most popular, followed by low volatility funds.

Vandana says that while nimble advisors and investors may choose to take medium term tactical bets in specific factor funds depending on market cycles, there is also a strong case for investors to consider factor based funds – especially structures like Axis’ FoF which combines all 4 factors– as a core holding in investor portfolios.


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DEBRAJ SENGUPTA ARN NO :ARN-38509 KOLKATA, 12 Oct 2024

Being a Distributor I think although investors at large are finding it tempting to invest in Factor/Smart beta investing due to slew of new launches and momentum leading the pack, however this euphoria may die down over time if these factor funds go through rough patches due to market behavior. Unlike diversified run on the mills Active funds, these funds take a lot concentrated bet and based on some mathematical models rather than pure Fund Managers play. And I truly believe a wide section of Distributors ( NDs, Banks and MFDs) would fail to comprehend the true nature of these types of funds and their relevance in Investors portfolio, Then it would be a really hard time for gullible investors to stay true to these funds. So, I believe rather than selling a compelling story to market these schemes, communication should be to capture the wide mandate and ride through the vagaries of market over a period of time at much less cost.

Mohsin Bijepuri ARN NO :33913 Chennai , 11 Oct 2024

Very good dissection on Value stocks & strategy. It can be a tactical or core investment strategy. Factor investing deserves allocation in the core part of a portfolio. Excellent insights indeed.

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