New Delhi, Oct. 17 -- Factor-based mutual funds follow specific investment characteristics, or factors, to select stocks rather than relying solely on a broad market outlook or a conventional market-cap-based approach.

These factors can include momentum, quality, low volatility, and alpha. Investors can access these strategies through actively managed funds as well as passive index funds and exchange-traded funds (ETFs).

Momentum strategies invest in stocks that have demonstrated relatively strong price performance, betting that the trend may continue. Quality strategies focus on companies with characteristics such as consistent earnings, sound balance sheets, and efficient use of capital.

Low-volatility strategies aim to select stocks...