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Lessons from Indexing ka Baap
In recent years, factor investing has gained popularity in both the US and India, particularly through the use of exchange-traded funds (ETFs). While index funds are commonly used as a core allocation in the US, many independent advisors also tilt portfolios using factor ETFs to seek extra returns or alpha over an index fund. However, the author notes that factors can mean different things to different people, and there are various definitions and techniques for implementing factor investing. Despite this, career risk remains a reality among fund managers and advisors, which can limit their ability to take bold investment decisions. The post highlights several reasons why factor ETFs may receive a bad rap, including data mining and the launch of diluted factor exposures. Nevertheless, there are firms that offer pure and high-octane factor exposures without prioritizing asset gathering. In India, the first wave of factor ETFs and funds is gaining traction from various fund houses, including ICICI and Nippon, with relatively decent volume. The author encourages readers to conduct their own diligence when evaluating factor funds rather than relying on past returns. Overall, the blog post provides valuable insights into the growing popularity of factor investing and the importance of careful evaluation and due diligence when considering factor funds for investment.
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recent years
factor
factor ETFs
factor investing
ETFs
Funds
exchange-traded funds
Investing
India
gained popularity
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