Factor Investing: Bridging Active and Passive Investing
Key Takeaway: Factor Investing aims to deliver superior risk-adjusted returns by selecting stocks based on specific attributes, providing a balanced approach to investing.
Understanding Factor Investing
Factor Investing targets specific characteristics (factors) in stocks to potentially enhance returns and reduce risk. Here are the six most common factors used in investment strategies:
Quality
Stocks with strong financial health and low debt
Momentum
Stocks that have shown recent strong performance
Value
Stocks trading below their intrinsic value
Low Volatility
Stocks with stable prices and fewer fluctuations
Alpha
Stocks that have outperformed the index
Size
Stocks with lower market capitalisation
Introducing Bandhan Nifty 200 Quality 30 Index Fund
- The fund focuses on companies with higher profitability, lower debt, and more stable earnings.
- Akin to choosing a reliable, time-tested brand known for its relatively consistent performance.
- Replicates the Nifty 200 Quality 30 Index, tracking 30 companies selected based on their Return on Equity, Debt-to-Equity ratio, and variability in Earnings Per Share (EPS) over the previous five years.
- Aims to capture the premium associated with high-quality stocks.
Bandhan Nifty 200 Quality 30 Index Fund: The Methodology
Quality score factors in return on equity, debt-to-equity ratio, and earnings variability. The debt-to-equity ratio is excluded for financial sector companies.
EPS Growth variability measures the extent to which a company’s earnings per share fluctuate over the past year. It is not calculated for stocks with negative EPS in any of the previous 6 fiscal years )
Source/Disclaimer- NSE. Data as of the end of 31st October 2024. Performance results may have inherent limitations, and no representation is being made that any investor will or is likely to achieve. Past performance may or may not be sustained in the future.
#1 Proven Historical Outperformance
The quality strategy has shown robust performance over various time horizons, outperforming broader indices, and aiming for better risk-adjusted returns with lower volatility.
#2 Sector Leadership: Consumer Discretionary and FMCG
The quality strategy often concentrates on certain key sectors such as Consumer Discretionary and FMCG, showcasing relatively consistent performance and defensive growth potential.
#3 Resilience During Market Downturns
The Nifty 200 Quality 30 Index has shown smaller declines during major global crises, offering downside protection.
Who Should Consider This Fund?
Ideal for those who prefer a relatively more stable investment route.
Suitable for long-term investors looking for sustainable growth potential and resilient earnings.
Ideal for investors aiming to add a defensive yet growth-oriented strategy to their portfolio.
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Make an informed decision. Learn more about investing in Bandhan Nifty 200 Quality 30 Index Fund
Fund Facts
Type of Scheme
An open‐ended scheme tracking Nifty 200 Quality 30 Index
NFO Period
18th - 29th Nov 2024
Benchmark
Nifty 200 Quality 30 TRI
Fund Manager
Mr. Nemish Sheth
Plans/Options
Regular/Direct Plan: Growth Option
Exit Load
0.25% - if redeemed on or before 15 days from the allotment date.
Nil - if redeemed after 15 days from
the allotment date
Minimum Investment
During New Fund Offer
₹ 1,000
And in multiples of Rs. 1/- thereafter
Investment Objective
The investment objective of the Scheme is to replicate the Nifty 200 Quality 30 Index by investing in securities of the Nifty 200 Quality 30 Index in the same proportion/weightage with an aim to provide returns before expenses that track the total return of the Nifty 200 Quality 30 Index, subject to tracking errors. However, there is no assurance or guarantee that the objectives of the scheme will be realised and the scheme does not assure or guarantee any returns.
Fund Manager
Nemish Sheth
Vice President - EquitiesBandhan AMC Limited
Mr. Nemish Sheth is a Fund Manager at Bandhan AMC (Erstwhile IDFC AMC) since November 2021. He comes with an experience of over a decade in fund management and Dealing in Equity, Derivatives, and Passive Funds. His prior stint includes Nippon AMC and ICICI Prudential AMC, as Dealer for Equity, Derivative and Passive Funds. Mr. Sheth completed his post-graduation in Management Studies with a specialization in Finance from IES Management College (Mumbai).
Product info
Bandhan Nifty 200 Quality 30 Index Fund
(An open-ended scheme tracking Nifty 200 Quality 30 Index)
This product is suitable for investors who are seeking*:
- To create wealth over a long term.
- Investment in equity and equity related instruments belonging to Nifty 200 Quality 30 Index.
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
