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Wednesday, December 03, 2025 | 01:28 PM ISTहिंदी में पढें
Exit a fund only if risk appetite changes or tracking error widens
Experts say investors should not exit smart-beta funds due to short-term underperformance as factor strategies are cyclical and tend to recover
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Smart-beta funds have underperformed the Sensex and Nifty over the past year, but analysts say the weakness is cyclical and advise investors to stay invested and diversify across factors.
Several smart-beta funds have underperformed frontline indices like the Nifty 50 over the past year. Investors must avoid knee-jerk reactions to short-term underperformance.
Cyclical underperformance
Momentum funds faced a sharper reversal over the past year. “Exposure to cyclicals and midcaps may have amplified their losses in a volatile market,” says Chintan Haria, principal - investment strategy, ICICI Prudential Mutual Fund.
Experts say this underperformance is cyclical. “Momentum typically faces reversals after extended rallies,” says Haria.No single factor leads every year. “Momentum leads in bull markets but is vulnerable during reversals. Quality and low volatility are defensive factors that show lower
