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Active Factor Funds: Mutual Fund Quant Shift in 2025

18 July 20251 min read
BANKING & FINANCEActive FactorFunds: MutualFund Quant Shiftin 202518 July 2025safalsetu.com

Why in the news

Quant investing is turning more active: fund houses are bringing out managed factor schemes instead of only index-tracking ones.

Key facts

  • Factor funds pick stocks by traits such as momentum, quality (ROE, low debt), value, size and low volatility.
  • Active momentum offerings: ICICI Prudential, Kotak, Samco, Union, Nippon India, Motilal Oswal.
  • Multi-factor offerings: Bandhan, Sundaram, Mirae Asset (via FoF) and SBI’s quant fund.
  • Sundaram’s NFO shut in July 2025; Kotak’s was due that month.

Why the shift

  • Passive factor indices have run for over three years, but factor cycles turn with macro conditions, valuations and sentiment.

Active advantages

  • Switching between factors, nimbler risk control, qualitative screens and custom models.

Exam angle

  • NFO = new fund offer; active funds can use earnings momentum too.

Test yourself

1. Which factor in factor-based investing targets profitability, ROE and low debt?

Quality is defined by profitability, ROE and low debt.

2. The ICICI Pru Active Momentum Fund combines which two types of momentum?

It combines price and earnings momentum, unlike passive funds that use price only.

3. Which is an advantage of active factor strategies over passive factor funds?

Active funds can switch between factors based on prevailing trends.

This topic is part of Daily Current Affairs 18 July 2025 (15 topics).

All topics of the dayDay quizJuly 2025

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