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To generate alpha, investors should opt for factor-based funds: Experts

As they have a short history, take only a small exposure to these funds initially in your satellite portfolio

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Fund managers say investors should decide between a market cap-based index and a smart beta index based on their portfolio return requirement and risk profile

Sanjay Kumar Singh New Delhi
Several factor-based index and exchange-traded funds (ETFs) have been launched in India based on strategies like low volatility, value, equal weight, quality, momentum and so on. Since these products have been around for only a short while, experts suggest investors should begin by taking a small exposure to them, which they may increase as they gain confidence.

Market cap-based funds can suffice

Some advisors only suggest pure passive, market cap-based index funds. Says Avinash Luthria, a Sebi-registered investment advisor and founder of Fiduciaries: “A Nifty50 index fund via a direct plan with fees of 0.1 per cent (10 basis points) is the

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First Published: Apr 02 2021 | 6:10 AM IST

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