Author(s): Amit Bathia, Jagabandhu Padhy, Mangesh Nigudkar, Christine D'Lima, Nandip Vaidya and Harshit Banthia
We have compared the risk adjusted returns of value and quality investing strategies individually and in combination. The research is done on small and mid-cap stocks in Indian Stock Market to determine multi-bagger stocks for a portfolio. The outcome showed that when specific value and specific quality factors get combined it gives better risk adjusted returns when compared to individually providing such outcome. While the value investing provides higher returns in the greatest number of comparisons to quality factors, it needs to be combined with quality to avoid value trap stocks and achieve higher returns. All strategies beat the benchmark returns in most cases except in terms of volatility. There is a consistent underperformance of portfolios from year 2019 to 2021. The strategies even though providing marginally higher returns, the risk in those portfolios is much higher.