Can factor-based funds dethrone large-cap funds?

Is it time to say goodbye to large-cap funds ? Not long ago, they formed a staple part of investors' portfolios, providing decent returns in the long run and standing strong amid market swings. However, over the years, large-cap funds have struggled to beat the benchmark. This paved the way for index funds as a more attractive investment option and, more recently, factor-based funds. Factor-based funds, what's that? As the name suggests, 'factor-based funds' pick stocks based on certain 'factors' that have helped deliver superior returns in the past. Currently, only four factors are prominent for investment in India. They are: Momentum : Momentum funds invest in stocks with strong recent price performance. When stock prices are on an uptrend, momentum funds capitalise on them by investing in them. Value : These funds tend to identify and invest in companies with relatively low value and boast superior dividend yield and ROCE (return on capital employed) . Such funds are known to shine during bearish market phases as they are usually the first to recover since their und