The Power of Many: Motilal Oswal’s Multifactor Strategy Revolutionizes Stock Investing

Motilal Oswal Asset Management has spotlighted the growing appeal of multifactor strategies in stock investing, a trend rapidly gaining traction among Indian investors. Unlike traditional single-factor approaches, multifactor strategies blend several proven investment factors—such as quality, value, momentum, low volatility, and size—within a single portfolio to balance risk and enhance returns.

 

What Are Multifactor Strategies?

Multifactor investing combines two or more factors, each with unique market behavior, to create a more resilient portfolio. For example, quality stocks offer steady earnings and low debt, momentum captures stocks on the rise, low volatility reduces exposure to sharp market swings, and size tilts toward smaller, potentially high-growth companies. By diversifying across these factors, investors can smooth out returns and reduce reliance on any single market driver.

 

Performance and Growth:

Multifactor funds have seen explosive growth in India, with assets under management jumping from ₹1,751 crore to ₹5,495 crore in just one year. The Nifty500 Multifactor MQVLv 50 Index, which equally weights momentum, quality, value, and low volatility, delivered an impressive 27.46% annualised return over the past five years, with consistent double-digit returns and minimal negative periods.

 

Why Choose Multifactor?

According to Motilal Oswal, multifactor strategies offer greater diversification and stability. Historical analysis shows these strategies outperform single-factor funds in consistency, with 94% of five-year rolling returns in double digits and no negative five-year periods since 2010. This approach helps investors stay invested confidently through market ups and downs.

 

Motilal Oswal’s multifactor equity strategies are fully rules-based, eliminating human bias and ensuring disciplined, objective stock selection across large, mid, and small caps. As multifactor investing gains momentum, it’s reshaping core portfolio allocations for Indian investors seeking reliable, long-term growth.

 

Sources: Business Standard, Motilal Oswal Asset Management