Understanding the Quality factor | Factor Investing | Factor based Index Funds & ETFs

Adopt a rule-based approach to your mutual funds by choosing a factor based investing strategy.

Factor investing is an investment strategy that seeks to build investment portfolios that invest in fundamental descriptors to identify companies without any subjective bias arising out of human judgement.

The Quality Factor aims to capture companies with durable business models and sustainable competitive advantages.

It has been observed that such high-quality stocks tend to outperform low-quality stocks, over a long time horizon, as they are better equipped to weather adverse economic conditions.
In order to define Quality stocks, investors could look at fundamental ratios such as Debt to Equity, Return on Equity and Return on Assets.

Add a ‘quality factor’ to the core investing portfolio by investing in Index Funds and ETFs tracking indices such as the S&P BSE Quality Index.

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