One of our new generation investors wanted to know what I felt about Factor Investing (Smart Beta Investing)and its sustainability in the Indian market. Before sharing my response at the conclusion of this column, let us first take a deep dive into the concept and modus operandi of Factor Investing.

Factor Investing funds that are offered to investors by Mutual Fund houses use specific ‘factors’ while making investments. Factor Investing funds use data and research to build a portfolio based on specific characteristics or factors in stocks that have historically optimised performance while lowering risk. These factors can include value, momentum, quality, volatility and size.

 Factor investing is not exactly a new concept worldwide….