Mutual Funds Turn Up the Dial on Active Factor Funds

Roll out active momentum, multi-factor schemes; more in the pipeline

- ABHISHEK KUMAR

The factor fund launch spree by mutual funds (MFs) is moving from the passive to the active space. Two new fund offerings (NFOs)—ICICI Pru Active Momentum Fund and Bandhan Multi-Factor Fund—are currently open for subscription. Sundaram MF's multi-factor fund NFO closed this Wednesday.

Besides, Kotak MF is set to launch an active momentum fund later this month. Mirae Asset MF also has plans to launch a multi-factor fund through the fund-of-funds route.

The launches in the active factor space coincide with the rising adoption of quantitative (quant) investing in the MF industry. Fund houses have been investing in setting up quantitative investing capabilities in recent years.

Factor funds, which use investment models that focus on one or multiple factors—such as momentum, quality, value, size, and market volatility—to construct portfolios, were until recently limited to the passive space, except for value- and size-based funds.