Factor funds or plain index.
Momentum, value, quality and low-volatility index funds tilt towards one trait instead of owning the market as it is. They cost more, so they have to earn that back before they help.
The expense ratio, direct plan. Nifty 50 index funds charge around 0.1% to 0.3%.
Before costs, every year on average. Negative if you think it trails.
The answer
The factor fund, just.
The factor fund has to beat the index by 0.30 points a year just to cover its higher cost. At 1% it ends ₹6.9 L ahead, and it will trail for years at a time on the way.
Plain index
₹99.0 L
- Return after costs
- 11.80%
Factor fund
Better₹1.06 Cr
- Return after costs
- 12.50%
How it is decided
What each grows to over 15 years
- Plain index₹99,00,43411.80% a year after costs
- Factor fundAhead₹1,05,88,29412.50% a year after costs
What this assumes
A steady return for each, with the factor fund's edge over the plain index set by you, before costs. Factors go through long stretches of trailing the market, and past outperformance is no promise of more.
Rules and rates from
Education only, not investment, tax or legal advice. I am not a SEBI-registered investment adviser.
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