Kavitha Menon's Blog

    Factor Investing: An introduction   Factor investing, is an asset pricing and portfolio construction approach that involves targeting specific drivers of returns. There are five main factors associated with higher returns that are widely used in factor ETF strategies: value, small-caps, momentum, low volatility and quality (which is also known as dividend payers). A sixth factor, yield, is sometimes included in the main factor definition count. For the purpose of our writeup today, we will be focussing exclusively on factor-based ETFs with some compelling statistics that should help you as an investor to: - Critically evaluate performance of large cap investments in managed funds - Usher in ETFs as a cost effective and promising part of your core portfolio We will also restrict this analysis of funds to the large cap space. It is likely that in a few years midcap and small cap indexes will start outperforming their managed peers, but so far data points to a reasonably