Factor-Based Mutual Fund Investment in India: The Smart Beta Wave of 2025
The Indian mutual fund industry is witnessing a paradigm shift in 2025, with a growing segment of informed investors turning to factor-based investing , also known as Smart Beta. This trend is reshaping how people approach mutual fund investment in India , offering an innovative middle ground between active and passive strategies. What Is Factor-Based Investing? Factor-based mutual funds are designed to systematically track investment factors, such as value, momentum, low volatility, quality, and size, that drive long-term returns. Unlike traditional index funds that track broad market indices like Nifty 50 or Sensex, Smart Beta funds apply these factors to build rule-based portfolios aimed at outperforming the benchmark with lower risk. These funds are gaining prominence among investors who want data-driven performance without paying high management fees typically associated with active funds. Why It’s Gaining Traction in India...