Invest in quant funds for higher capital appreciation

financialexpress.com:

Investors with a high-risk appetite can look at quant funds which eliminate the risk of fund manager decisions going wrong. The data-driven approach of these funds can execute trades quickly and gain from thin price differentials to generate higher capital appreciation.

These funds offer advantages in mitigating the effects of market volatility and emotional investing. Reliance on algorithms and models eliminates the influence of human emotions and prevents impulsive reactions from fund managers.

These funds can be described as market capitalisation and sector-agnostic flexi-cap funds where fund management decisions are majorly driven by a set of established rules. These funds are among the top performers for a couple of years and have outperformed the benchmark and their peers.

Of the eight such funds, Quant Quantamental Fund has given a return of 56% in one year followed by 360 ONE Quant Fund and Nippon India Quant Fund at 49% and 35%, respectively. Over a period of three years, Quant Quantamental Fund has given a return of 29%. In fact, two fund houses —SBI Mutual Fund and Motilal Oswal Mutual Fund — are expected to launch their quant funds. Going ahead, more asset management companies will launch such funds for two primary reasons: future-proofing their product proposition and completing their product suite to capture a new wave of investors’ interest.

Sonam Srivastava, founder and fund manager, Wright Research, says quant funds have exhibited promising results in recent years. “This algorithmic approach offers a compelling alternative to traditional fund management, potentially mitigating emotional bias and identifying subtle patterns that human analysis might overlook,” he says.

In quant funds, no human