Edelweiss MD and CEO Radhika Gupta, recently shared valuable insights on X (formerly Twitter) from their factor investing team, supported by detailed charts and data. In her first tweet, Gupta highlighted the performance of various investment factors over the past decade, revealing that momentum has been the best-performing factor, significantly outperforming others. The accompanying chart showed momentum’s impressive growth multiple of 16.0x, far surpassing other factors such as quality, low volatility, and value.
Here are the answers. Data is from our factor investing team!
The best performing factor over 10 years – momentum (1/3) https://t.co/kUXlZF3tNE pic.twitter.com/umdOwPyrlw
— Radhika Gupta (@iRadhikaGupta) July 6, 2024
In a follow-up tweet, Gupta discussed the four key factors driving stock returns: value, quality, growth, and momentum. She posed a quiz to her followers, asking which factor performed the best over 10 years, which was the most consistent, and which was the least consistent. The chart detailed the characteristics of each factor, with examples of stocks representing quality, growth, value, and momentum.
Gupta’s tweets sparked responses from financial professionals, including Salonee Sanghvi, a CFA, Vikas Khanna, and Hitesh Raheja, also a CFA. Sanghvi identified momentum as the best performer over 10 years, quality as the most consistent, and value as the least consistent. Khanna, however, pointed to growth as the best performer, followed by value and momentum. Raheja agreed with Sanghvi, affirming momentum’s top performance and quality’s consistency.
Gupta is known for her social media presence and constantly shares insights via these platforms. Earlier this month sharing an example, Gupta said she recently saw the portfolio of an investor who had invested ₹27,000 worth of monthly SIP across 31 funds, of which 15 were narrow sectoral ones, cautioning it as “a danger in these times”.
“A danger in these times is to fill your portfolio with narrow ideas that ideally are satellite allocation. Remember, 80% of the portfolio should be “dal-chawal” funds!” she stated.
When a follower asked what such funds would comprise, she added, “I mean stuff that is not narrow themes. Hybrid funds, diversified equity funds, active or passive, it doesn’t matter. The point is broad-based, all-weather stuff.”
