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.