Alpha leads as other factor indices falter
Annual returns for six key NSE factor indices are compared, revealing a lack of consistency in single-factor strategies. Broad-based Nifty 500 index serves as a benchmark. The data suggests diversification as a prudent approach. Alpha and Momentum indices top the list of long-term returns, with Alpha remaining positive despite market challenges.
Equal Weight strategies show relative strength by evenly distributing exposure. Momentum underperforms due to volatility and trend reversals. Low Volatility and Quality factors lag the broader market, indicating stability and fundamentals do not always translate to superior returns. Amidst market pressures from high crude prices, geopolitical uncertainty, and foreign outflows, multi-factor strategies are recommended to diversify risks and better navigate volatility.
Long-term performance suggests Alpha and Momentum excel, while Low Volatility and Quality underperform.
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