How to combine investment styles through factor investing
Subscribe to enjoy similar stories.Most investors struggle with one question: what stock to buy. But what if investing wasn’t about finding the next multi-bagger, but about backing a pattern that repeats over time? Factor investing is built on this idea.Instead of chasing individual stocks, factor investing targets specific traits or investment styles, such as value (undervalued stocks), momentum (stocks that are in an uptrend), or quality (stocks of financially strong companies).
Different factors outperform at different points in the market cycle.Factor investing, in that sense, sits right in the middle of active and passive investing. It doesn’t actively rely on stock-picking calls, but neither does it blindly track market-cap indices.
Instead, it follows rules to capture specific investment styles such as value, momentum, quality or low volatility, each of which tends to perform differently across market cycles.According to data from Mirae Asset Investment Managers (India), the industry's assets under management in factor funds rose to over ₹50,000 crore as of 30 April 2026 from less than ₹1,000 crore five years ago. But historical data shows no single style wins every year."No single style has performed consistently.
However, they do outperform the market over the long term. Thus, diversifying within different styles protects from style rotation," said Abhishek Tiwari, CEO, PGIM India Mutual Fund.According to a study by PGIM India Mutual Fund, over the last 10 years, factor indices have delivered annualized returns of 14-19%, against Nifty 50 and Nifty 500 annualized returns of around 12-13%.
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