Factor Focused: Quantitative investing for high returns

Choosing assets based on certain characteristics (factors) that have historically influenced stock performance, such as value, growth, volatility, and momentum, is known as factor investing. 

Assume you are assembling a successful sports team. Rather than selecting specific players, you select attributes they have, like skill or speed. In the world of finance, stocks are chosen based on certain characteristics, such as minimal risk or strong growth potential, rather than the firm. This approach seeks to increase profits.

Consider variables as characteristics shared by stocks that perform well. Popular ones include quality, value, momentum, and scale. Value seeks out inexpensive stocks that have promise, whereas momentum seeks out winners who are on a roll. Size favors smaller firms with significant room for expansion, whereas quality gives preference to stable, successful enterprises.

Investing in factors leverages these established sources of income. By distributing your wealth among several variables, it diversifies your portfolio and might increase your chances of success. Building a resilient investment landscape is akin to having a team of professionals, each concentrating on their area of expertise.

It has been noted that factor strategies tend to exceed the Nifty 50 in a healthy way when more equities are beating the benchmark index.

A wise approach to gain exposure to the equity markets without taking on excessive risk is through factor-based techniques.

Our Investment Strategy for Factor Focused

This portfolio employs factor investing, which combines two methodologies and focuses on particular aspects like value, growth, and momentum to build portfolios. By focusing on these aspects, it aims to do better than the whole market.

• Invest in a diversified range of low-volatility Nifty 100 stocks to get consistent returns with minimal fluctuations in price, emulating the Nifty Alpha Low Volatility 30 Index.
• Aim for comparable index returns with an even weight distribution by investing equally in each of the 50 equities that make up the Nifty 50 Equal Weight TR Index.

What do you invest in with Factor Focused ?

• You get to capture booming sectors like finance, healthcare, FMCG & automobiles.
• You get to use your funds by focusing on sectors like Oil, Gas, Power for potential growth.
• You get to invest in India's top 100 companies, each with the same weight in the portfolio.
• You get to invest in Indian companies with stable stock prices and potential for consistent returns.

Factor Focused: Pros and Cons

Benefits

• Increased profits by focusing on particular qualities
• Diversification of a portfolio beyond market capitalization
• Lower portfolio risk when the market is down.

Drawbacks

• A factor may experience periods of poor performance.
• Demands a thorough comprehension of several aspects.
• Because of the fluctuating nature of the market, factors are unpredictable.

Factor Focused: Annualised past returns 

• In order to achieve higher returns and greater diversification, the Factor Focused portfolio employs a multi-factor strategy that combines several traits such as growth, value, and low volatility.
• It has a high risk rating 
• Benchmark: NIFTY 50- TRI

Who should invest with Factor Focused Stack ?

Factor investing is best suited for investors who can tolerate possibly higher risk and rewards and who think that certain factors will continue to influence stock performance.But people should be prepared to stick with their investments during market cycles because things can perform differently over time. Factor investing is especially attractive to individuals who want to analyze market trends and modify their tactics accordingly, since it necessitates a proactive approach.

• This is ideal for the age group of 18 years upto 50 years
• This is for investors who delve in aggressive risk investing 
• Investment horizon of 3+ years
• You can expect the returns to outperform traditional market cap weighted strategies
• This is ideal for investors with the financial goals of long term growth, risk management and income generation.