BEAT the Nifty by 10% with Smart BETA Strategies | Factor Funds & the Future of Index Investing

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In this video, I delve into the world of factor investing and how the power of smart beta funds can potentially help you earn up to 10% more returns compared to the Nifty 50. I often look at factor based investing as the future of index investing on account of it's ability to harness the forces of value, momentum, low volatility, and quality to achieve outstanding results and supercharge portfolio returns
In this video, I examine four of the most common factors
1. The Value Factor is a time-tested approach that focuses on identifying undervalued stocks. By targeting companies with attractive valuations relative to their fundamentals, value funds have the potential to deliver substantial returns
2. Momentum investing aims to capitalize on the notion that stocks that have performed well in the past tend to continue performing well in the future
3. With low volatility investing, we explore how this factor can help you navigate market turbulence with ease as low volatility funds offer a smoother ride and potential protection during market downturns
4. And the Quality factor emphasizes companies with strong fundamentals, robust balance sheets & stable earnings growth and how quality factor funds can offer consistent returns with reduced downside risk
I'll also guide you through the process of selecting the right factor funds at the right time, showcasing how astute timing can maximize your returns. This is no easy task but by looking at historical patterns one can have some idea of which factor is likely to succeed during different economic conditions. So whether you're a seasoned investor or just starting on your investment journey, this video is your gateway to understanding and capitalizing on the immense potential of factor investing
👉 Video Chapters:
00:00 Factor Investing
00:47 What is a Factor?
03:41 1. Value Factor
05:12 2. Momentum Factor
06:26 3. Quality Factor
07:38 4. Low Volatility Factor
08:40 Performance of Smart Beta Funds
11:52 How to Invest in Factor Funds
14:03 Shankar's Viewpoint
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Disclaimer: I am not a SEBI registered investment advisor or research analyst. The content posted on this platform is purely for educational purposes and none of it constitutes investing or trading advice. Viewers should do their own research and diligence before investing or acting on the information presented

[@vamsikrishna24]

Never seen anyone explain factor investing as crisply and clearly. Amazing video again Shankar!

[@shankarnath]

Thank you for your kind words, Vamsi Krishna ji

[@ziasmailbox]

Shankar sir is highly undervalued … his market value is far lesser than his intrinsic value.

[@ashishlh786]

This is invariably the most underrated and highly content rich channel on investing.... i started Index beta investing last year in 22 and was actually wondering about the differences from a basic nifty 50 index and eureka!! Here you have shared it. extremely thankful to you for this extremely rate content. Kudos to you Shankar to help retailers like us guide on this beta investing. More power to you and keep up this good work... thanks is a very small word but kindly accept it as a small gesture from us..

[@shankarnath]

Thank you very much for your kind appreciation and words. I'm happy you found this video useful. There's another related video that I think you might like: kzbin.info/www/bejne/l4qrg4eGiamnhM0

[@hegdevishwa]

Crisp and clear, backed with lots of data and without unnecessary drama! We need more educators like you sir than influencers!

[@shankarnath]

Thank you very much! Glad you found the content useful and informative

[@shivendratripathi1162]

I've recently started watching your channel and I'm impressed with how well-researched your videos are. You always back up your claims with data, which makes your videos more credible and informative.

[@shankarnath]

Thank you Shivendra ji, glad you liked it

[@maulik2500]

This guy makes best videos on stock market investing

[@gopikannans9246]

Amazing value on factors from this session. Highly appreciate all your efforts for providing informative ones continuously.

[@shankarnath]

Thank you very much, Gopi. Glad you are finding the content on my channel informative and actionable.

[@maheshkarambelkar6230]

You have great wisdom and still you are humble. This makes you different from many You tubers. Good to start the day watching such content.

[@shankarnath]

Good morning to you too. I'm happy you found this video informative and useful.

[@Ritcorp]

Fantastic data points, visuals, sound and voice clarity. Perfect pace too...always look forward to your videos.😊

[@shankarnath]

Thank you very much, Ritesh ji .. glad you liked it

[@shivrajrana7427]

That is outstanding work Shankar! So, refreshing to watch a real educational video on youtube!

[@shankarnath]

Glad it was helpful! Thanks 🙌

[@SunitDas7464]

Soul soothing voice and aura you have sir. Thank you for putting up such great content.

[@shankarnath]

Thank you Sunit. Glad you found it useful

[@user-fo7by6co7p]

You are super awesome (Super knowledgeable or Acquire knowledge with a light speed and share the same with us in a neutral way (concise and crisp manner))

[@shankarnath]

Thank you, DP .. I'm happy you liked it and found it informative

[@naveensodem]

One day I want to see Niftyindices coming out with "NIFTY 500 Momentum 50 Index". No idea what might happen, but i am very sure there would never be a dull day.

[@mohammadfiroz5085]

Thank you Mr.Sankar...I saw this video a couple times... very useful... Thank you once again

[@shankarnath]

Thank you. Glad you liked it, Firoz ji.

[@leninbabu8310]

I am very sure that investing in factor based index funds will generate alpha as compared to conventional index funds in long term. Thank you so much sir for the detailed analysis.

[@shankarnath]

Glad you found this video information. Most welcome 🙌

[@Yogeshgarg16solo]

This video was amazing and insightful. I don't understand why are you not getting millions of views with so much amazing content.

[@shankarnath]

Good to know. Thanks!

[@amitgulati2726]

This is good insight to factor funds.. i started giving factor funds to my clients in 2021 starting with Momentum 30 fund..

[@shankarnath]

Thanks. Yes, I too have been investing systematically in N200M30 since April 2021.

[@amitgulati2726]

@@shankarnath Good to know, same here..

[@irannasonnagi5967]

Thanks sir. Very valuable, clear,mind blowing idea in index funds investment. Expecting more light in the this subject with your humble depth knowledge 🙏

[@shankarnath]

Glad it was helpful

[@funduitguy6916]

Excellent video ! I was waiting for this one to come ! 👍

[@shankarnath]

Thanks, glad you liked it

[@jayadevtn1987]

Thank you for these wonderful insights ... Very very helpful.

[@shankarnath]

Most welcome. Glad you liked it

[@narendersachdev8220]

Mesmerised by the content you bring up and how you present it to make the understanding very easy!!

[@shankarnath]

Thank you very much. Happy to hear that!

[@pkprprempavankumar8749]

Thanks a million for pinning the video link in value and momentum fund video ji.. As usual one more brain storming video. Your video is a morning caffeine for me :-)

[@shankarnath]

So nice of you. Thanks!

[@shilpamanocha3195]

Sir your content is really insightful and informative. And it’s just not concepts, so when you list the funds or options, it gives much more clearer picture. Thank you 👍

[@shankarnath]

Thank you very much. Glad you are finding the videos useful, informative and actionable.

[@sriphanikrishnakarri9150]

Sir, have been watching your videos. Today, I subscribed as I cannot afford to miss even one video in future.

[@shankarnath]

Welcome aboard!

[@mohammadfiroz5085]

Thank you Mr.Shankar ...well researched and nicely presented...

[@shankarnath]

So nice of you. Thank you Firoz ji

[@arun_kannan]

Content is great as usual. Shout out to who ever made that mini shankar popping out and asking people to subscribe.

[@shankarnath]

Thank you

[@Gpsuraj99]

Top notch analysis especially the comparisons from 8:40

[@shankarnath]

Thank you! Glad you found it useful

[@vsubramanya]

Thanks Shankar for the wonderfull video on index fund factor investment. Truly amazing, very crisp and great wisdom..

[@shankarnath]

Most welcome. Glad you liked it! 🙌

[@vrs3439]

Excellent video. For the last year or so I have moved away from Nifty 50 index fund and split my portfolio into the Tata Midcap Momentum 50 and Nippon Value 20 funds. I too went through the NiftyIndices website to settle on these indices. Couple of issues with factors: data on them are mostly backtested and not actually lived through. MFs or ETFs that follow them are also quite new. Eg. Tata increased the expense ratio from 0.11% to 0.28% this month. And their portfolio seems to have slightly strayed away from the index as of last time I checked. Again, not major issues, but still something to be aware of.

[@shankarnath]

Thanks for sharing your experience

[@Indrajeetpimple]

Undoubtedly the best video of yours

[@shankarnath]

Thank you

[@shabeerkt5169]

Great video as usual, I understand the effort you have taken to make this video

[@shankarnath]

Thank you very much Shabeer

[@maxpaybe]

Thank you Sir. Excellent content shared crisply

[@shankarnath]

Most welcome

[@sarikasharma1080]

this is a brilliant video. keep up the good work.

[@shankarnath]

Thank you!

[@disneymathewjacob]

Your explanation is always on point. Factual points and no unnecessary exaggeration.

[@shankarnath]

Thank you very much!

[@shaikalisha5015]

What a brilliant video , every time your video give great subject , knowledge keep it up sir

[@shankarnath]

Thank you very much, Shaik Alisha. Glad you liked it

[@dipenshah9542]

Great Video on Factor investing. Multi Factor like Alpha Low Volatility and SmallCap 250 quality 50 are also interesting newer indexes for future investing.

[@shankarnath]

Thank you!

[@babaiganguly189]

Just love your videos . Thanks a lot

[@shankarnath]

My pleasure 😊

[@anujoybardhan]

Thanks Shankar for this video, i remember i had requested you to do this one on factor based investment, I agree with you, these factor based passive investments do have potential of offering the alpha that we all seek..❤

[@shankarnath]

Most welcome

[@AjayKumarSharma-ic4un]

as always true transparent knowledge able video... great knowledgwe sharing by you..

[@shankarnath]

Thank you very much

[@RameshKumar-hr2fp]

Today I learned new things.. Thanks Shankar Ji!

[@shankarnath]

Most welcome, Ramesh ji. Glad you found it useful

[@TheRohitpanwar]

Really feel validated by your such details video....2 years back started with nifty 50 index fund but shifted to momentum 30 index investing bcoz i on research found momentum to be better strategy than nifty 50 index....though have not received any major difference between the two in term of return yet, but your video gives confidence that i made the right decision. Thank you for your efforts.

[@shankarnath]

Great to know that, Rohit ji. I'm glad this video helped

[@naveensodem]

Its been 9 months and that index is beating all other index funds. Howz your portfolio going ?

[@TheRohitpanwar]

@naveensodem my index is giving xirr of 17% and momentum MF is giving xirr of 24%(this is for past 2 years )

[@naveensodem]

@@TheRohitpanwar sweet

[@manishgupta90]

Marvellous study.. thanks..

[@shankarnath]

Most welcome!

[@rohankane9168]

Wow Shankar Sir, thanks for teaching us a new perspective on lumpsum investment 🙏

[@shankarnath]

Most welcome, hope you found it logical. I generally do lumpsum only in case of debt instruments but with every factor displaying flippant behaviour in accordance to the prevailing economic condition, I felt a lumpsum works best in this case

[@financialknowledge_Rajesh]

Please explain when works what?

[@vikram0607]

Great video as always Shankar sir 👏

[@shankarnath]

Thank you very much, Vikram

[@senthilkumars6212]

This is a wonder drug for all DIY investors. Keep enlightening us in the future as well.

[@shankarnath]

Glad you found it useful, Senthil

[@meerkatfrolic]

Smart Beta Video Shankar! Excellent analysis and information. The choice of topic & content shines. A keen and sensible MF info seeker would just need to watch this special compelling video in order to be your subscriber. Besides, it - and even other such made by you - sets you apart from the crowd. Thank you and All the Best.

[@shankarnath]

Thank you very much for your kind appreciation. I'm glad you found this video and its content useful.

[@abhishekkaushal792]

Wht a video sir,only and only mentor on youtube for new financial advice

[@shankarnath]

Glad you liked it, Abhishek. Wishing you the best

[@deepakgurjar4372]

Excellent presentation Shankar sir 🙏🏻

[@shankarnath]

Glad you liked it, Deepak ji

[@TRUEIndian413]

Thanks sir a lot. This is very very informative video and very unique

[@shankarnath]

Most welcome. Glad you liked it!

[@youngbrains7628]

very underrated channel..... i generally dont comment but its my duty as a subscriber to keep you motivated....... extraordinary work

[@shankarnath]

Thanks

[@sandeepvemula9181]

Great video and content, thanks a lot sir🙌

[@shankarnath]

Most welcome, I'm happy you found the video & its content helpful

[@ashimpathak5035]

Exceptional quality video sir. 15 minutes delivered more value to the viewers than 100s of GROW videos. Thank you so much and wish you the very best.

[@shankarnath]

Thank you very much for your kind appreciation, Ashim. Glad you liked this presentation, it was a lot of work but I enjoyed making it

[@commanderbharatkumarunerca7293]

Value explanation..😊

[@shababmu6536]

What an insightful video❤

[@shankarnath]

Glad you think so! 🙌

[@gaurishankarkv.2416]

Thanks!

[@shankarnath]

Thank you Gaurishankar for this kind gratuity and for your appreciation. May I request you to watch a follow video on this where I have used a combination of momentum and value indices. Link: kzbin.info/www/bejne/l4qrg4eGiamnhM0

[@rp55555]

Excellent analysis and very well presented Keep it Up

[@shankarnath]

Thanks 🙌

[@amitdeshpande2548]

Very insightful, thanks

[@shankarnath]

Most welcome 🙌

[@JoyDevSpiritualHealer]

Shankar your videos was the sole reason for me to subscribe to ET Money. Really appreicate your presentation style and clarity in explaining various tough financial jargons in easy to understand words.

[@shankarnath]

Thank you so much for your kind appreciation and continued support of my work 🙌

[@sudharsansathiamoorthy1075]

Excellent presentation Sir!!

[@shankarnath]

Thank you very much

[@allen1nash2]

Excellent 👍

[@shankarnath]

Thank you!

[@amitshah5261]

Very impressive, 0lease continue making such content😊

[@shankarnath]

Thanks 🙌

[@aradhyaagnihotri3670]

Thank you Shankar for the insightful video. Blink twice if you think 2023 is going to be a momentum year.

[@shankarnath]

Most welcome

[@ritesh8050]

Remarkable Shankar sir..❤ from Kolkata

[@shankarnath]

Thank you 🙌

[@SRavichandranIndia]

Superb one... I would rate this video the best of all.... great value addition..... Thank you....... Suggest also add asset allocation of these factor funds at different market conditions as a follow up video and that will be a great input to passive long term investors.. best wishes

[@shankarnath]

Thanks for the suggestion

[@nagadeepk9355]

As much I like your videos for the quality content you put together I also like your videos for unique 'Avatars' you bring out in each video

[@shankarnath]

Thank you very much Nagadeep ji. Appreciate it!

[@vinayp20211]

Excellent video.. i have never seen this kimd of content.. never before ever after may be.. Kindly let us know how to create a mutual fund portfolio 100% equity.. Thank you so much for this content.. very soon your channel will definitely follwed by all over world..❤

[@shankarnath]

Thank you for the appreciation. There is no single rule on creating a mutual fund portfolio as everyone's income, liabilities, risk orientation, goals, tenure, expenses, savings and outlook is different. I have shared my process in this video, have a look: kzbin.info/www/bejne/mH-YgpeujpiFjNU

[@Chikusurili]

Great content and presentation 🎉

[@shankarnath]

Thank you!

[@paragvaishampayan9501]

Well expressed 🙏

[@shankarnath]

Thanks 🙌

[@gagandeepsinghkarir8516]

The content and quality is simply superb!!! Never have I seen anyone educate about concepts with such simplicity , poise and elucidity. Factor investing seems to be the future of index investing.... I further request Mr Shankar to make another video for indepth analysis about - A) Different Returns generated (ie SIP, Annual, Rolling etc.) through exhaustive back test of past (100 years ) US data and also check SPIVA reports about same (if some data is available) and educate all viewers about useful info regarding success of various ----> single factor and multi factor indices. B) Thereafter , check the replicability of above , to last 30 years indian data (indianindices) I KNOW ITS ASKING FOR TOO MUCH, BUT WE ALL HAVE FULL CONFIDENCE THAT U CAN DO FULL JUSTICE TO SAME....😊😊 THANKS A LOT

[@shankarnath]

Thank you for the appreciation and suggestions

[@sumitalwar]

Many Thanks for the video sir..i was waiting for this for a long time.. As a request kindly also see 5 year rolling returns.

[@shankarnath]

Most welcome, Sumit ji. I purposefully left out 5 year rolling returns because we generally see rolling returns when we want to do a long-term commitment like what we do with an SIP. However, in my view, factors are opportunity investments and in the video, I'm encouraging jumping from one factor to the other based on the economic climate. Now, over a 5 year period, the economic climate can be hot, cold, warm and wet .. and we aren't looking for an average performance. For ultra high returns (20+%), the skipping & hopping from one factor to another is important. That's why I excluded 5 year rolling, hope this clears.

[@sumitalwar]

@@shankarnath so many thanks..and very helpful on your part for the book on low volatility investing.

[@shilpiburman7102]

Love the low drama, low decibel and high value content of your videos! Given the current market would now be considered a good time to invest a lumpsum in a momentum factor fund?

[@shankarnath]

Thank you very much

[@rohancoepmech]

What an insightful video. Shankar sir this video blew my mind. Would like to know more about this. Do let us know how do we time and select the methodology as well. Thanks

[@shankarnath]

Most welcome

[@v3nkattrader684]

awesome work

[@shankarnath]

Thank you!

[@skumaran1275]

Thanks sir

[@shankarnath]

🙌

[@shockits5688]

Great Value, good going! Should we consider ourselves to be in a momentum phase now?

[@shankarnath]

Thanks

[@gautamsinha5998]

Please do add another column for equal weight index as a comparison too. I would be interested to know performance of equal weight and these smart beta funds

[@shankarnath]

Thanks for the suggestion

[@rowdyanna_]

I ❤ Index funds 💥💥💥great share

[@nikhilgatagat]

Can do both sip in momentum and value in 50;50 allocations and do rebalancing

[@parthaaec07]

Fantastic! you could add Alpha 50 in future. thanks.

[@shankarnath]

Thanks for the suggestion

[@aceani]

Hi Shankar, really appreciate the effort you put into your videos and the quality of knowledge rendered in them! A couple of quick questions here: 1. How do you compare / contrast this to the Trending Value Strategy you outlined in an earlier video (O'Shaughnessy)? 2. What should be the exit / rebalancing strategy for the Trending Value Strategy?

[@shankarnath]

Thank you, I'm glad you like them 1. I really don't compare 2 strategies. I prefer trying out both (or simulating it) and seeing which I am more inclined towards. Btw, there are dozens of factors and there are single/multi-variates -- am not certain which one are you hinting at 2. This part was discussed in the Trending Value video itself

[@sohamkundu273]

Extremely informative and in-depth video. Can you suggest some portals where we can do screening of various types of mutual funds or atleast find multiple mutual fund details at the same place ?

[@shankarnath]

Thank you very much. I use advisorkhoj.com and valueresearchonline.com for mutual funds

[@anuragydv]

another thing if you can show Shankar... as you already have data.. that what happens to volatility and returns if you have say 33 percent value, 33 percent momentum and remaining in low volatility factor investing.. and then compare it with Nifty 50. Would be interesting. i guess. thanks for lovely content !!

[@shankarnath]

Glad you liked it & thanks for the suggestion

[@22jayyu]

Very interesting analysis and insights. Serving me as a good learning material. Any views on factor based investing for Nifty Next 50 ?

[@shankarnath]

Thank you, glad you liked it! Factors based on a small sub-set like Nifty Next 50 stocks is a little difficult to implement and bring in efficiency. I personally prefer a universe of 150 or 200 stocks .. and from there, the methodology can pick up 25 to 30 stocks taking into account the factor and liquidity aswell.

[@aritrabhattacharya1530]

thank you Shankar !

[@shankarnath]

Most welcome, Aritra ji. Glad you liked it

[@aritrabhattacharya1530]

@@shankarnath am 54 .. this video esp is an eye opener .. blindly index passive investment might not work.. Thank You.. God bless !

[@shankarnath]

@@aritrabhattacharya1530 Much appreciated, Aritra ji. Most times we get consumed with what's in front of us and don't try to look beyond. Ofcourse, that's a function of time, exposure, intent and opportunity. I am today a self-employed content creator but just 2.5 years back I was a salaried business head. An intervention happened which I much say has changed my life at the age of 43. Realization is the first step and now that you know, I'm certain you'll take the next steps.

[@aritrabhattacharya1530]

@@shankarnath Yes ,yesterday did STP partly to ur suggested but on s&p bse value 30 & nifty 50 value 20 it seems only etc are available

[@GoutamGuha-yu2hn]

Please discuss value and growth investing in interest rate cycle

[@shankarnath]

Thanks for the suggestion

[@GoutamGuha-yu2hn]

Please discuss about value and growth investing in interest rate cycle

[@shankarnath]

Thanks for the suggestion

[@sourabhmayekar3354]

Thanks

[@shankarnath]

🙌

[@abhijeetdesai1862]

Many thanks for the video but wondering how one can diversify SIP and in what percentage in these factors based funds. Also should we continue to invest in Nifty 50 in small portion.

[@shankarnath]

Most welcome. There is no general rule that applies to all as we have different preferences, income, saving patterns, financial goals, risk tendencies etc. I've given what I do in a previous video, please see if some parts of it helps you: kzbin.info/www/bejne/mH-YgpeujpiFjNU

[@leninbabu8310]

very nice

[@shankarnath]

Thanks 🙌

[@abhijitdebnath9811]

How a passive investor should invest in Micro cap, Infra, Media, Capital Goods, etc. as there’s no such ETF or index fund for those? Please suggest.

[@win289]

Please recommend MF and Smallcase fund for the same

[@nishanthans6269]

Sir kindly do another video on this topic regarding Nifty alpha 50 and Nifty alpha low volatility indices.

[@shankarnath]

Thanks for the suggestion

[@vinayaks64]

Good explanation but pl bring out such videos when solutions exist to use the info given .Can u suggest how can this info b used in the current available funds

[@shankarnath]

Thanks for the feedback

[@imuwithash]

What do you think ? Recent Rally is a repeat of the 2008 share market ?

[@arindam199130]

Sir, that's a great information! Thanks a lot! It will be very helpful for me if you could solve my doubts 😊 Could you please let me know from where you got the indexes performance (returns percentage) as it seems that factor based Indexes are very new in India? Is it safe to invest in small AUM (UTI momentum index or Motilal momentum index) in factor based Indexes as I want to invest large amounts in it?

[@shankarnath]

Most welcome. Q1. Kindly access niftyindices.com and follow the steps below 1. On the top navbar, you'll see REPORTS 2. Within that sub-menu, click on HISTORICAL DATA. A new page will be rendered 3. In the top drop-down (orange color text), select "Total Returns Index Value" 3. Select Equity from next drop-down 4. Then the index you want data on i.e. Nifty 200 Momentum 30 5. Then the dates (this index starts from 01-April-2005) 6. Click Submit Q2. What do you mean by "safe"? Any particular fears you are referring to?

[@sneharshdamani7148]

Incredible video! However I feel your benchmark index should be nifty large-midcap 250 TRI and not nifty 50 TRI for the nifty200 factor stocks

[@shankarnath]

Thanks for the suggestion

[@walkerx27]

sir please make an analysis on India's Defence Sector, would be super appreciated!

[@shankarnath]

Thanks for the suggestion

[@shaikakber4717]

❤

[@AP-qj9qu]

Sir please make only video on small case invesment product should we invest in it or not or what is manager fee should be or called expense of manager ratio from total investment

[@shankarnath]

Thanks for the suggestion

[@darshanparikh4136]

I remember you replied to my comment that you will make a video on factor based investing. You delivered the promise. Great.

[@rachitagarwal8288]

Thankyou so much for such a great valuable content.. I need a help from you Can you let me know how's the Axis growth opportunities direct plan fund for a view of long term..It would be a great help for me if you give your feedback.. Thanks much in advance and keep sharing such amazing finance videos

[@shankarnath]

Most welcome. Apologies, I have not analysed this particular Axis scheme.