Factor Investing: Can You Beat 24% Mutual Fund Returns?
Factor investing picks stocks based on rules like momentum, value, or quality — not just market size. Momentum-based funds have given the highest 10-year returns in India, but that doesn't always mean the most risk. Here's what it means for your SIP.
A ₹10,000 SIP using momentum factor strategy could outgrow a regular large-cap SIP by ₹15–20 lakh over 10 years.
Momentum investing delivered this over 10 years — but most Indians don't use it
Key Takeaways
Check if your current SIP portfolio holds any factor-based fund — search for 'factor', 'momentum', 'alpha', or 'quality' in your fund name on your mutual fund app.
Compare the 5-year and 10-year returns of Nifty 200 Momentum 30 Index Fund versus your existing large-cap fund on Value Research or Morningstar India before adding exposure.
Limit factor fund allocation to 10–20% of your total equity portfolio — factor strategies can underperform for 2–3 year stretches, so do not replace your core diversified SIP.
Factor investing picks stocks based on rules like momentum, value, or quality — not just market size. Momentum-based funds have given the highest 10-year returns in India, but that doesn't always mean the most risk. Here's what it means for your SIP.
Here's what happened: Factor investing selects stocks by a specific rule — momentum, value, quality, or low volatility — rather than purely by company size or index weight.. India's momentum-based factor index funds have delivered approximately 24% annualised returns over the last 10 years, outpacing most active large-cap funds.. Research shows momentum does not always carry the highest risk among factors — value and low-volatility strategies can suffer steeper short-term losses during market dislocations..
What you should do: Check if your current SIP portfolio holds any factor-based fund — search for 'factor', 'momentum', 'alpha', or 'quality' in your fund name on your mutual fund app.. Compare the 5-year and 10-year returns of Nifty 200 Momentum 30 Index Fund versus your existing large-cap fund on Value Research or Morningstar India before adding exposure.. Limit factor fund allocation to 10–20% of your total equity portfolio — factor strategies can underperform for 2–3 year stretches, so do not replace your core diversified SIP..
Momentum factor funds rebalance every 6 months — this means higher portfolio turnover and slightly more short-term capital gains tax. Check the fund's rebalancing frequency before investing.
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- [1]“Factor investing styles: Momentum tops with over 24% returns in 10 years—but does it carry the highest risk?” mint - money · 4 Aug 2026
This article is reported by GoCredit's Editorial Team based on the source above. GoCredit synthesises, contextualises, and adds India-borrower-relevant analysis. We are not the original publisher.