Factor Investing: Bridging Active and Passive Investing
'Factors' might sound new, but the concept has been part of investing for years. Active fund managers have long used these factors to manage portfolios.
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:
Value
Stocks trading below their intrinsic value
Momentum
Stocks that have shown recent strong performance
Low Volatility
Stocks with stable prices and fewer fluctuations
Quality
Stocks with strong financial health and low debt
Alpha
Stocks that have outperformed the index
Size
Stocks with lower market capitalisation
Introducing Bandhan Nifty 500 Value 50 Index Fund
- The fund considers multiple valuation metrics such as P/E, P/B, ROCE, and Dividend Yield to identify opportunities.
- Similar to buying a quality product at a discounted price.
- Mirrors the Nifty 500 Value 50 index consisting of 50 companies from its parent Nifty 500 index, selected based on their ‘value’ scores.
- Targets undervalued firms, aiming for better risk-adjusted returns over time.
Bandhan Nifty 500 Value 50 Index Fund: The Methodology
Exercise repeated every 6 months (Jun and Dec) to determine entry and exit of stocks
Source/Disclaimer- Nifty indices. Data as of 31st Aug 24; ^Value score determined based on Earnings to Price ratio (E/P), Book Value to Price (B/P), Sales to Price (S/P), and Dividend Yield. For each eligible stock, Z score is calculated based on (E/P), (B/P), (S/P) and Dividend Yield. Each of the Z scores is then given equal weight. #Stock weights are capped at the lower of 5% or 3 times the weight of the stock in the index based only on free-float market capitalization. Each sector is capped at 25%.
#1 Strong Recovery in the Post-Pandemic World
The Nifty 500 Value 50 index has demonstrated a robust recovery post-pandemic, significantly outperforming the broader Nifty 500 index.
#2 Track Record of Outperformance
On an annualised return basis, the Nifty 500 Value 50 index has historically outperformed broader market indices.
Who Should Consider This Fund?
Investors seeking to capitalise on ‘value opportunities.’
Those with a long-term investment outlook.
Investors who can stay invested through market fluctuations.
Downloads
Make an informed decision. Learn more about investing in Bandhan Nifty 500 Value 50 Index Fund
Fund Facts
Type of Scheme
An open-ended scheme tracking Nifty 500 Value 50 Index
NFO Period
14th to 24th October, 2024
Benchmark
Nifty 500 Value 50 Index
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 500 Value 50 Index by investing in securities of the Nifty 500 Value 50 Index in the same proportion/weightage with an aim to provide returns before expenses that track the total return of the Nifty 500 Value 50 Index, subject to tracking errors. However, there is no assurance or guarantee that the objectives of the scheme will be realized and the scheme does not assure or guarantee any returns.
Fund Manager
Nemish Sheth
Associate 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 500 Value 50 Index Fund
(An open - ended scheme tracking Nifty 500 Value 50 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 500 Value 50 Index
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
