Newsletter : June 2026

Understanding Factor Investing Across Market Cycles

Why the strongest portfolios are not built around one strategy - but around several that take turns leading.

IPL 2026 is in full swing - and if you have watched any match this season, you already understand factor investing. A winning team is never built around one type of player. You need a consistent opener, an aggressive middle-order bat, a bowler for pressure situations, and a finisher for the final overs. Each player is selected for a specific role - and together, they cover each other's weaknesses.

Factor investing works exactly the same way in your portfolio. Instead of simply buying the largest companies or trusting a fund manager's gut feel, factor investing selects stocks based on specific, measurable characteristics - called factors - that have historically delivered stronger returns over long periods.

Think of it as sitting between two familiar approaches. Like an index fund, it follows pre-defined rules - no guesswork. But unlike a plain index fund, it tilts toward specific stock characteristics rather than simply owning every company based on size. Four factors have been widely studied in Indian equity markets: Momentum, Value, Quality, and Low Volatility.

The Four Factors - Simply Explained

Momentum - The Trend Follower

Stocks rising strongly tend to keep rising - for a while.

Like a batsman in great form - you back him because confidence carries forward. But momentum can reverse sharply when conditions change.

Value - The Patient Contrarian

Buy good businesses the market has temporarily priced too cheaply.

Like backing Yuvraj Singh after his cancer comeback - unfashionable at the time, but those who held on were rewarded enormously.

Quality - The Stability Seeker

Own financially strong, well-run businesses that hold up through all conditions.

Like picking dependable players for difficult pitches - they may not be flashiest, but rarely let you down when it matters.

Low Volatility - The Smooth Rider

Invest in stocks that move less - and fall less during market declines.

Like a balanced team that may not score fastest, but never collapses dramatically under pressure.

Each factor has its season. Momentum thrives when market trends are strong. Value does well in recovery phases. Quality shines during uncertainty. Low Volatility holds up best when markets are falling. And no single factor outperforms in all conditions - which is the most important insight in this article.

What The Data Shows - 21 Years Of Evidence

Between April 2005 and March 2026 - covering multiple crashes, recoveries, and everything in between - here is how each factor performed: The table below compares major factors and broader market indices across daily rolling return periods between April 2005 and March 2026.

Index	*Median Rolling Return (%)**			Negative Observations (%)		Maximum Drawdown(%)
Index	3 Year	5 Year	10 Year	3 Year	5 Year	Maximum Drawdown(%)
Nifty 500 Low Volatility 50 - TRI	16.12	15.83	15.43	0.41	0.00	-48.26
Nifty 500 Quality 50 - TRI	16.93	16.77	16.15	3.20	0.03	-53.60
Nifty 500 Momentum 50 - TRI	19.80	21.95	20.10	3.55	1.66	-70.24
Nifty 500 Value 50 - TRI	17.14	14.28	14.75	18.42	3.65	-66.06
Nifty 100 - TRI	13.17	13.54	12.97	2.86	0.03	-61.08
Nifty Midcap 150 - TRI	17.82	16.41	16.64	9.59	0.87	-72.89
Nifty Smallcap 250 - TRI	16.64	13.67	14.32	17.11	7.36	-75.56
Nifty 500 - TRI	13.54	13.62	13.30	6.21	1.01	-63.71

Data as of March 2026. Source: ACEMF. Past performance does not guarantee future returns.

What This Tells Us

Every factor has outperformed the plain Nifty 100 and Nifty 500 over long periods. Momentum gave the highest returns - but also suffered the steepest fall. Low Volatility and Quality delivered strong returns with far fewer down periods. The pattern is clear: higher return potential comes with higher risk. No single factor wins in all conditions.

The Leadership Keeps Changing - Every Single Year

Here is the most important table in this article. It shows which factor came first and last each year from 2016 to 2026:

2016	2017	2018	2019	2020	2021	2022	2023	2024	2025	2026*
Value 23.3	Momntm. 69.51	Low Vol. 7.20	Nifty 100 11.44	Quality 27.30	Momntm. 76.86	Value 23.16	Value 62.60	Momntm. 26.51	Value 16.66	Value -3.87
Midcap 5.47	Smallcap 58.47	Nifty 100 3.39	Nifty 500 8.64	Smallcap 25.55	Smallcap 61.48	Low Vol. 7.31	Smallcap 49.09	Smallcap 26.42	Low Vol. 15.51	Low Vol. -10.58
Nifty 500 4.68	Midcap 55.73	Nifty 500 -1.55	Momntm. 8.61	Midcap 25.12	Value 54.66	Nifty 100 4.94	Momntm. 47.71	MIdcap 23.76	Nifty 100 9.79	Quality -11.07
Nifty 100 4.66	Value 47.02	Quality -2.01	Low Vol. 8.17	Low Vol. 24.10	Midcap 46.48	Nifty 500 4.25	Midcap 44.61	Quality 23.03	Nifty 500 7.25	Midcap -12.99
Low Vol. 1.91	Nifty 500 37.65	Momntm. -10.88	Quality 1.80	Momntm. 20.87	Nifty 500 30.95	Midcap 3.91	Quality 41.95	Value 19.25	Midcap 5.46	Momntm. -13.06
Quality 0.54	Quality 33.62	Midcap -12.49	Midcap 0.58	Nifty 500 17.7	Quality 29.14	Smallcap -2.64	Low Vol. 33.44	Nifty 500 16.00	Quality -3.41	Nifty 500 -14.02
Smallcap 0.52	Nifty 100 32.88	Value -26.42	Smallcap -7.59	Nifty 100 15.97	Nifty 100 26.03	Quality -2.82	Nifty 500 26.91	Low Vol. 15.99	Smallcap -6.30	Smallcap -14.19
Momntm. -1.55	Low Vol. 31.74	Smallcap -26.54	Value -13.87	Value 8.14	Low Vol. 20.11	Momntm. -7.59	Nifty 100 21.24	Nifty 100 12.87	Momntm. -8.04	Nifty 100 -14.27

*Data as of March 2026. Source: ACEMF. For illustration only.

Note:
1) The above data is presented in % terms.
2) The following indices were utilized to represent the returns for the various factors and broader market segments:

Momentum: Nifty 500 Momentum 50 TRI
Smallcap: Nifty Smallcap 250 TRI
Midcap: Nifty Midcap 150 TRI
Quality: Nifty 500 Quality 50 TRI
Low Volatility: Nifty 500 Low Volatility 50 TRI
Value: Nifty 500 Value 50 TRI
Nifty 500: Nifty 500 TRI
Nifty 100: Nifty 100 TRI

Look at Momentum - it was the best performer in 2017 (+69.5%) and 2021 (+76.9%), but the worst in 2022 and 2025. Value led in 2016, 2022, 2023, and 2025, but was the worst performer in 2019 and 2020. Not one factor stayed on top.

The lesson for investors is clear: chasing last year's best-performing factor is one of the most reliable ways to underperform. The factor you buy at the top of its cycle is often the one about to hand leadership to someone else.

The investor who tries to predict which factor leads next is playing a game with no consistent winner. The investor who owns multiple factors is playing a different game entirely.

Why Combine Factors?

Since no single factor outperforms in all conditions, combining multiple factors helps reduce dependence on any one strategy. When Momentum is struggling, Quality or Low Volatility may be holding up. When Value is out of favour, Momentum may be running. Together, they provide a more balanced experience across full market cycles - and make it far easier for investors to stay the course.

Factor investing is not a short-term strategy. It is a long-term, rules-based, data-backed approach that has delivered meaningful results over 21 years of Indian market history. The strength lies not in identifying the best factor today - but in staying invested through all cycles and letting disciplined, diversified exposure compound steadily over time.

Speak to your MF distributor to understand how factor-based funds can be incorporated as part of a well-structured, long-term equity portfolio suited to your specific financial needs.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully. Data sourced from ACEMF. Rolling return analysis covers April 2005 to March 2026. Past performance does not guarantee future returns. All data and illustrations are for educational purposes only.

Your Child's Dream College Will Cost - How Much?

The number is bigger than you think. The time is shorter than you feel. And the cost of waiting is greater than most parents realise.

The number is bigger than you think. The time is shorter than you feel. And the cost of waiting is greater than most parents realise.

Every time parents speak about their children's future, their eyes light up. The dreams are vivid - IITs, IIMs, AIIMS, top colleges abroad. But ask them one simple question: "Have you sat down and actually calculated what that dream will cost?" - and the room goes quiet.

Most parents have not. And that silence can be very expensive - in more ways than one.

The cost of higher education in India is not just rising - it is compounding. Education inflation in India has consistently run around 10% annually, which is roughly double the general rate of inflation. That means every ten years, education costs are nearly three times what they were before. Not a little higher. Three times.

Source: MOSPI, Edufund research

Quick Check: Which Investor Are You?

Pick the investor who sounds closest to you.

Sid, the Momentum Investor
Sid prefers winners that are already showing strong price trends, He can handle sharp moves if the trend is strong.

Yuvraj, the Value Investor
Yuvraj looks for businesses that are available below their true worth. He can wait for the market to recognise true value.

Shaurya, the Quality Investor
Shaurya prefers strong businesses with healthy financials, stable earnings, and lower debt.

Nitin, the Low Volatility Investor
Nitin wants equity participation, but he does not want very sharp portfolio swings.

Keep your answer in mind as you read.

Why Choosing the Right Factor Matters More Than Chasing Returns

Many investors pick factors by looking at what worked recently. If Momentum has done well, they want Momentum. If Value has recovered and performed well, they want Value. If Low Volatility looks stable, they become interested in Low Volatility. This is where the problem begins.

Factors move in cycles. One factor may lead in one period and lag in another. The same factor that looks strong today may go through a dull phase later at some point. That is why choosing a factor only by looking at recent returns can lead to poor investor behaviour.

A factor can be strong, but the investor may still exit at the wrong time if the journey does not suit them. That is why the real question is simple:

Which factor can you stay invested in when it underperforms?

For Illustration purposes only

Sid, the Momentum Investor

Sid likes strength.

When he looks at the market, he wants to know which stocks are leading, which sectors are gaining traction, and where price action is strong. He doesn't like sitting too long in stocks that are not moving.

For Sid, Momentum Factor Investing is a natural fit.

Momentum focuses on stocks that have shown strong recent price performance. The idea is that stocks already moving strongly may continue to do well for some time.

But Sid has to accept one thing. Momentum can change direction quickly. A stock or sector that is leading today may lose steam when market leadership rotates.

Sid's Investing Style

Sid may suit Momentum if he:

Has a higher risk appetite
Can handle sharp portfolio movements
Is comfortable with market trends
Understands that leadership can rotate quickly
Does not panic during short-term corrections

Sid's Factor Reminder

Momentum can reward discipline, but it can also test nerves.

Sid should not enter Momentum only because it has recently performed well. He should enter only if he can handle the speed and the sudden reversals that come with it.

Yuvraj, the Value Investor

Yuvraj looks where others are not looking.

He is not easily impressed by popular stocks or market excitement. If a stock looks ignored but has underlying worth, he becomes interested. He believes that markets can overreact and that mispricing can create opportunities.

For Yuvraj, the Value Factor is a natural fit.

Value investing focuses on stocks that appear undervalued compared to their fundamentals or intrinsic worth. These stocks may be out of favour today, but the investor expects the market to recognise their value over time.

The challenge is patience.

Value can look weak for long periods. It can test the investor because the market may take time to change its view.

Yuvraj's Investing Style

Yuvraj may suit Value if he:

Is genuinely patient
Can handle being early
Does not need quick validation
Is comfortable going against the crowd
Can wait for fundamentals to be recognised

Yuvraj's Factor Reminder

Value needs time, patience, and conviction.

Yuvraj should not choose Value if he expects instant results. Value works best for investors who can stay calm when the market is ignoring their chosen factor.

Shaurya, the Quality Investor

Shaurya focuses on the strength of the business.

He looks for companies with strong return ratios, stable earnings, healthy cash flows, and lower debt. He does not want to chase every fast-moving market idea. He prefers businesses that can hold their ground across market cycles.

For Shaurya, Quality Factor Investing is a natural fit.

Quality focuses on companies with strong financial fundamentals. These businesses may be better placed to handle difficult market conditions and recover steadily after stress.

But Quality also has a trade-off. In a very aggressive bull market, where risky stocks are rising fast, Quality may look slow.

Shaurya is okay with that. He is not investing for excitement. He is investing for resilience.

Shaurya's Investing Style

Shaurya may suit Quality if he:

Prefers strong businesses
Values financial discipline
Wants resilience during market stress
Thinks long term
Does not want to chase every market rally

Shaurya's Factor Reminder

Quality may not always be the fastest, but it focuses on strength.

Shaurya should not compare Quality with high-risk strategies during every market rally. Quality is built for investors who prefer durability over constant excitement.

Nitin, the Low Volatility Investor

Nitin wants equity exposure, but sharp falls make him uncomfortable.

He understands the importance of long-term investing, but he does not want a portfolio journey that keeps him worried. If his portfolio falls too much, he may feel tempted to exit.

For Nitin, the Low Volatility Factor is a natural fit.

Low Volatility focuses on stocks that have historically shown lower price fluctuations. It does not remove risk. Equity investing will always carry risk. But it can help make the ride smoother for investors who are sensitive to drawdowns.

Nitin is not trying to be the top performer in every market phase. His priority is staying invested without panic.

Nitin's Investing Style

Nitin may suit Low Volatility if he:

Dislikes sharp drawdowns
Wants a smoother equity journey
Values capital preservation
May panic during steep market falls
Prefers steady participation over aggressive returns

Nitin's Factor Reminder

Low Volatility can make equity participation feel more manageable.

Nitin should not expect Low Volatility to beat aggressive strategies in every rising market. Its role is to reduce the discomfort of sharp swings.

Same Factor, Different Time, Very Different Outcome

Before choosing a factor, investors should understand one simple point: factor returns can look very different depending on when you look at them.

INDEX (AS ON 31st MARCH 2020)	P2P 5Y CAGR
NIFTY 500 VALUE 50 TRI	-6.65%
NIFTY500 MOMENTUM 50 TRI	4.68%
NIFTY500 LOW VOLATILITY 50 TRI	5.36%
NIFTY500 QUALITY 50 TRI	1.75%
NIFTY 500 TRI	1.28%

INDEX (AS ON 31st MARCH 2026)	P2P 5Y CAGR
NIFTY 500 VALUE 50 TRI	28.45%
NIFTY500 MOMENTUM 50 TRI	16.46%
NIFTY500 LOW VOLATILITY 50 TRI	14.91%
NIFTY500 QUALITY 50 TRI	12.76%
NIFTY 500 TRI	11.88%

INDEX (AS ON 31st MARCH 2026)	5Y CAGR
NIFTY 500 VALUE 50 TRI	14.28%
NIFTY500 MOMENTUM 50 TRI	21.95%
NIFTY500 LOW VOLATILITY 50 TRI	15.83%
NIFTY500 QUALITY 50 TRI	16.77%
NIFTY 500 TRI	13.62%

Source: NJ AMC's Internal Research, CMIE, NSE, NJ AMC's Proprietary SmartBeta Research Platform. The start date for the data is 1st April 2005. Past performance may or may not be sustained and is not indicative of future returns.

Look at the value factor. As on 31st March 2026, NIFTY 500 Value 50 TRI delivered a 5-year point-to-point CAGR of 28.45%. As on 31st March 2020, the same index had delivered -6.65% over five years. The factor did not change. The time period changed.

This is what factor cycles look like in practice. A factor that appears to be a winner today may have looked deeply disappointing just a few years ago, and vice versa. Choosing a factor based only on recent returns means you are always looking in the rear-view mirror.

This is exactly why exiting a factor too early can be costly. An investor who lost patience with Value in 2020 may have missed the strong recovery that followed. The return was waiting, but the investor needed to stay invested long enough to experience it.

Every factor has rewarded investors over the long run. None has done so in a straight line. That is why the real risk is not only choosing the wrong factor. It is exiting the right factor too early.

Single Factor vs Multifactor: What Suits Your Investing Style?

A single factor approach can work well when the investor has strong conviction. Sid may choose Momentum with full understanding of its sharp reversals. Yuvraj may choose Value knowing that patience is required. Shaurya may choose Quality because he values strong businesses. Nitin may choose Low Volatility because he wants a smoother equity experience.

But many investors are not purely one type. You may like Momentum, but also want some Quality. You may believe in Value, but also want lower volatility. You may want equity growth, but not the pressure of guessing which factor will lead next.

That is where Multi Factor Investing can help. A multifactor strategy combines factors such as Momentum, Value, Quality, and Low Volatility. It reduces dependence on one factor cycle. When one factor is going through a weak phase, another factor may help balance the journey.

Choose Single Factor if: You clearly understand one factor, accept its weak periods, and can stay invested with conviction.

Choose Multi Factor if: You want a more balanced factor journey and do not want to depend on one factor working at the right time.

Mini Quiz: Find Your Factor

Choose one answer for each question.

Question 1: What do you usually notice first in the market?

A. Stocks or sectors with strong price trends
B. Stocks that look undervalued
C. Companies with strong fundamentals
D. Stocks with lower price swings

Question 2: What makes you most uncomfortable?

A. Missing a strong market trend
B. Buying a stock at an expensive valuation
C. Owning weak businesses
D. Seeing sharp portfolio falls

Question 3: Your factor underperforms for 18 months. What do you do?

A. Stay if the trend process still makes sense
B. Wait because value can take time
C. Review business quality and stay disciplined
D. Look for a smoother strategy

Question 4: What kind of equity journey do you prefer?

A. Fast-moving and trend-led
B. Patient and valuation-led
C. Steady and fundamentals-led
D. Conservative and lower-swing

Your Result

Mostly A: You may be like Sid, the Momentum Investor.
Mostly B: You may be like Yuvraj, the Value Investor.
Mostly C: You may be like Shaurya, the Quality Investor.
Mostly D: You may be like Nitin, the Low Volatility Investor.
Mixed answers: You may be better suited to a Multifactor approach.

A Simple Step-by-Step Framework to Find Your Factor Fit

Not sure which category you fall into after the quiz?

Use this two-step filter.

First, ask yourself whether you can genuinely stay invested through five or more years of underperformance without switching.
If the answer is no, a Multifactor approach may suit you better than any single factor.
If yes, move to the second question, which investor type resonates most with your natural instincts?

Your answer points directly to your factor fit.

Conclusion

Let's return to Sid, Yuvraj, Shaurya, and Nitin checking their portfolios. Each of them is looking at a different number on the screen. Each of them feels something different about what they see. And each of them needs a different reason to stay invested.

Sid stays because the trend still makes sense to him. Yuvraj stays because he knows patience is the edge. Shaurya stays because the businesses he owns are still strong. Nitin stays because the journey has been smoother than he feared.

None of them is wrong. They simply needed different factor strategies, ones that matched not just their financial goals, but their temperament.

There is no universally best factor. Every factor goes through periods of outperformance and disappointment. The right factor is not the one with the highest recent returns. It is the one you can understand clearly, tolerate honestly, and stay invested in through full market cycles, because the return was always waiting. The question was only whether you stayed long enough to receive it.

For investors who are unsure about depending on a single factor cycle, a diversified multifactor strategy may offer a more balanced and consistent compounding journey across market conditions.

FAQs

Q) I keep switching between factors based on what performed well recently. What should I do?
This is one of the most common mistakes in factor investing. Factors move in cycles, and recent performance is often the worst guide to future returns. The better question to ask is: which factor can I stay invested in when it underperforms for one to three years? Start there, and your factor choice will follow naturally.

Q) Should I choose a factor based on recent returns?
No. Recent returns can be misleading because factors move in cycles. A factor that performed well recently may underperform later, and a factor that is currently weak may recover over time.

Q) Can conservative investors participate in factor investing?
Yes. Conservative investors typically find Low Volatility factor more aligned with their temperament, as these focus on stocks with historically lower price swings. Alternatively, a Multifactor approach spreads exposure across multiple factors, which can reduce dependence on any single factor's cycle and provide a smoother long-term journey. The key is choosing a factor whose journey you can stay committed to, not just one whose past returns look attractive.

Q) What if I relate to more than one investor type?
Many investors do. If you see yourself in two or more of the personas described above, for example, you value Quality businesses but also want lower portfolio swings; that is a strong signal that a Multifactor approach may suit you better than a single factor strategy. Multifactor investing is specifically designed for investors who want the benefits of multiple factors without having to predict which one will lead next.

SEBI Registered Name (Number): NJ Mutual Fund (MF/076/21/02) | Details of Other Regulatory
Registrations: https://shorturl.at/SEBua

Investors are requested to take advice from their financial/ tax advisor before making an investment decision.

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY.

Fund Manager Interview

Mr. Sanjay Chawla

Chief Investment Officer - Equity, Baroda BNP Paribas Mutual Fund.

Mr. Chawla has over 35 years of experience in fund management, equity research and Management Consultancy. Currently, he is Chief Investment Officer - Equity at Baroda BNP Paribas Asset Management India Private Limited. In his prior roles, he has worked with Baroda Asset Management India Limited as Chief Investment officer, Birla SunLife AMC as Sr. Fund Manager-Equity, managing various schemes with different strategies. Mr. Chawla has also worked as Head of Research with SBI Capital Markets and in various capacities in the equity research space in Motilal Oswal Securities, IDBI Capital Markets, SMIFS Securities, IIT Invest Trust & Lloyds Securities. He is the fund manager for certain schemes of the Mutual Fund. Mr. Chawla is graduated with a Master of Management Studies from Birla Institute of Technology & Science (BITS), Pilani.

Please note we have published the answers as it is received from the Fund Manager of Baroda BNP Paribas Mutual Fund.

Q : Following the recent government commentary around fuel conservation, gold imports, and external vulnerabilities, do you believe long-term investors should be concerned about the broader macroeconomic impact, or are these measures largely preventive steps reflecting prudent economic management?

Answer : In our view, the recent government commentary around fuel conservation, gold imports etc is more of a groundwork towards the possibility of an extended resolution to the West Asia conflict. As the conflict lingers and the disruptions in the Straits of Hormuz continues, crude/gas/petrochemical prices remain elevated. This is likely to place a downward pressure on GDP growth, an upward bias on inflation and a worsening current account deficit (CAD) placing pressure on the currency. It makes the situation for maintaining fuel prices less and less tenable. For long term investors, the currency and bond markets (OIS markets are tentatively pricing in 50bps rate increases by the close of FY27) have already recalibrated to a large degree. Equity has seen a small bounce from the lows of March when peace talks began and market may give up those rebound gains in case a truce is delayed. However, our health as an economy as we entered into this conflict is vastly different from say the global financial crisis years or the tech meltdown years. Valuations euphoria had already drained through CY2025 and our valuations have now reverted to mildly below long term levels. FII ownership is also at a multi-year low indicating no extended ownership. Retail leverage/margin financing etc have also been manageable. Yes, growth may be vulnerable and one could see 300-500bps of earnings cuts, but it would not be meaningfully large as an extension to impact on markets. This crisis may actually be a reasonable window for long term investors to get into markets. A resolution of the conflict would naturally translate to cool off in energy markets in 1-2 quarters, changing not only sentiments but also reducing the CAD and relieving the risks to growth and inflation.

Q : Beyond financial metrics, how do you assess the qualitative aspects of a company while filtering stocks for long-term portfolios? What are the early signs that help you differentiate sustainable compounders from businesses benefiting only from short-term cycles?

Answer : We look at a triangulation of BMV - business, management and valuation to identify long term winners. A company's ability to weather shocks and sustain its growth can stem from multiple sources - a technology proficiency, large scale driving competitiveness, ability to leverage on raw materials (e.g. access to high grade alumina for an aluminium producer) or labour costs (certain labour-intensive jobs may be more competitive out of India) etc. The other part M - management is where we desire consistency between statements and action, proper timely execution of articulated strategy with a high level of governance and lastly the V - valuation i.e. there has to be a relation between price (we pay) and the value (we get).

Q : Smart beta strategies are gaining ground as investors seek a middle path between passive and active investing. How do you view the growth of smart beta in India, and can factor-based strategies consistently add value across market cycles compared to traditional active and passive approaches?

Answer : These are interesting alternatives to broaden the choices available to investors. Some of these categories are quite nascent so one could see some build-up of assets in the near future. However, they have their own pros and cons. On the positive side, they may be a little cheaper and also they do eliminate some human biases. On the negative side, typical strategies like momentum or quality etc. do not work across all time frames and it may be more appropriate for an astute investor to keep shuffling across such styles. A less involved investor may prefer a professional to take the calls through active management. Long term investors may also find it cumbersome to constantly shuffle styles and suffer tax leakages if their intent is to reap benefits of long-term investing.

Q : With the launch of multiple strategies in the newly introduced SIF space, how should investors understand the role of these products within their portfolios? What type of investors are best suited for SIF strategies, and how different are they from traditional mutual fund offerings?

Answer : The SIFs are a new category of mutual fund strategies that are available to investors within the broader MF platform. The investment strategies of the funds utilize the same asset classes and securities as traditional mutual funds - Equity, Fixed Income, Commodities, InVITs, etc. The key differentiator being the manner in which these varied asset classes and instruments ( including derivatives) are used to run the investment strategy for these funds. Investors should evaluate their risk appetite, map out their investment and financial needs and then consider investment choices that would help them achieve these needs. The SIFs tend to run relatively more complex strategies than mutual fund schemes, and for many of the strategies, may have higher risk portfolios. Therefore, investors would be well guided to choose funds based on their risk appetite and evaluate individual SIF strategies for their suitability in their portfolio.

Q : Many investors struggle with asset allocation discipline during bull and bear cycles. How should investors decide when to rebalance equity exposure rather than reacting emotionally to market movements? What indicators or life-stage factors should ideally drive such decisions?

Answer : Investors should stick to their asset allocations that have been created based on their risk appetite, time horizon and investment needs. Bull and Bear cycles are a normal part of the capital markets and difficult to predict and therefore even more difficult to time investments in accordance with these cycles. We believe investors should review their portfolios on a regular basis and re-balance only if required, based on their needs and risk appetites. It is difficult, but investors should actively try to ignore relatively short-term market movements and stay disciplined and focused on their needs.

Q : While digital platforms have made investing more accessible, data indicates that investors working with MFDs tend to stay invested longer through market cycles. Do you believe the role of distributors is evolving from product distribution toward behavioural coaching and financial discipline?

Answer : Mutual Fund Distributors are an integral part of the Mutual Fund ecosystem. Financial decisions for most of the populace are a daunting and esoteric activity and therefore most investors require handholding for both the actual investment decisions as well as guidance through the process of executing those investment decisions. As the market grows, evolves and matures, we see distributors playing more active roles in their investors' investment life cycles. The resilience of SIPs and Mutual Fund flows despite market volatility has clearly shown that the increasing education and emphasis on disciplined investing, staying the course through market cycles and aligning asset allocation to risk appetites is beginning to make an impact on the broader investing population. MFDs have been instrumental in this growth and understanding of investments.

Source: Internal Research

Mutual fund investments are subject to market risks, read all scheme-related documents carefully.

Ramachandran Krishnamurthy (ARN-161512)
AMFI REGISTERED MUTUAL FUND DISTRIBUTOR

Prasad Ramachandran

9967715486

9664528393

prwealth.investment@gmail.com

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"We have taken due care and caution in compilation of this E Newsletter. The information has been obtained from various reliable sources. However it does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions of the results obtained from the use of such information. Investors should seek proper financial advise regarding the appropriateness of investing in any of the schemes stated, discussed or recommended in this newsletter and should realise that the statements regarding future prospects December or December not realise. Mutual fund investments are subject to market risks. Please read the offer document carefully before investing. Past performance is for indicative purpose only and is not necessarily a guide to the future performance."

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