Full Disclosure: I received no gift or Money for writing this blog post. I am writing this only as I like the Concept.
NFO of Axis Quant Fund is open from 11 June to 25 June 2021. Though this is a Very great concept, not much is discussed. Even our Indices are reshuffled by One committee, Indians do not follow so many Basic investing principles.
One such Principle is that Investing is Supposed to be out of Human Feeling. But that Is hardly possible. Impossible. It starts with Asset choice. Even if you follow some rules, that is also based on human behavior. There may be some errors. For example, the listing of a company, for what Timeframe, Which asset Class, why specific stock, Why Specific fund? So on and so forth.
Quantitative investing, also known as systematic investing, is an investment approach that uses advanced mathematical modeling, computer systems, and data analysis to calculate the optimal probability of executing a profitable trade.
As The Above para explains, Quantitative investing uses only mathematical models. So that explains one Drawback of them.
Imagination is out of syllables for them. A company is developing Some assets or acquiring another company. Quant Funds are suitable for calculation, but at the moment, Imagination of the future has come into the picture, and Quant Funds are worthless.
Imagination is a plus point for humans, but there is some limit to Human. I can’t imagine what the future of the sugar sector is. I can’t imagine what BPCL will be if privatized. I can’t imagine if the Indian GDP grows by 10%, What will be the growth of LIC or the cement sector. I am sure I also can’t handle millions and billions of data. I don’t even handle it personally. I am not a professional analyst.
Indian capital market is the biggest in terms of Listed companies. I am sure the way we are growing, and some big listed companies are coming for listing like LIC, PayTM. The market capitalization of the Indian capital market is supposed to increase. I am sure no one can claim that I can keep singlehandedly track more than five sectors every day.
Before Axis Quant fund, Nippon India quant fund, DSP Quant fund, and Tata Quant fund are already available options. All of them beat Sensex with a Big margin. One reason may be their small size. The fund which I was studying is the Nippon India Quant fund. Only 28cr. Even after giving a 50.46% return in one year, this fund show more than half of the large-cap stocks.
The objective of this Axis Quant fund says a lot. First, to generate long-term capital appreciation by investing primarily in equity and equity-related instruments selected based on a quantitative model. However, there can be no assurance that the scheme’s investment objective will be achieved.
One thing I understood is that portfolios of them can be different, but as the core idea is the same, they are worth taking a look at.
In my view, at least one Quant fund is a must in your portfolio.