Factor-Based Investment Strategies: A 10-Year Performance Analysis

Welcome to TrendMap, your guide to the performance of different investment segments. In this edition, we present a 10-year performance tracker of various factor-based investment strategies. The annual returns are ranked for 6 key NSE Factor indices, with a broad-based index, Nifty 500, thrown in for comparison. This map shows that no single-factor strategy consistently outperforms, making a strong case for diversification. By Sameer Bhardwaj.

Alpha, Value dominate long-term factor returns

The market environment in 2026 so far has been selective, with only a handful of strategies remaining in positive territory. Value has emerged as the best-performing factor, reflecting a clear investor preference for reasonably priced stocks amid broader market volatility. Alpha, too, has shown resilience, highlighting the continued effectiveness of stock-selection-driven strategies despite weakness in the wider market.

The Equal Weight index has delivered marginal gains, indicating relatively balanced participation without an overreliance on heavyweight stocks. In contrast, the Nifty 500 index has come under pressure, underscoring the broader market’s struggle amid volatility and uneven sectoral performance. Notably, traditional defensive positioning has failed to provide the expected cushion in the current phase. This is evident in the weak performance of the Low volatility factor, which has lagged despite market uncertainty.

Long-term performance

Over the past decade, Alpha has been the best-performing strategy, followed by Value. Active stock selection has consistently supported Alpha’s outperformance, while Value has benefited from periodic rotations into undervalued stocks and phases of cyclical recovery. Momentum has also delivered strong returns, reflecting the effectiveness of trend-following strategies. In comparison, both the Nifty 500 and the Nifty Equal Weight indices have generated similar returns, suggesting that broader market participation beyond index heavyweights has not led to meaningful long-term outperformance.

Source: NSE. *2026 data is year-to-date based on 26 May 2026 closing values. Other years returns are calculated between the first and the last trading day closing values. 10-year return is the compounded average return. Indices considered-Equal Weight: Nifty100 Equal Weight, Low Volatility: Nifty100 Low Volatility 30, Alpha: Nifty200 Alpha 30, Momentum: Nifty200 Momentum 30, Quality: Nifty200 Quality 30, Value: Nifty200 Value 30, Nifty 500: Nifty 500.