#Quant MF has come out of nowhere to top the performance charts over the the past two years. It has gone from Rs 250 crore in assets in 2020 to 8k crore at present and from 25k folios to 10 lakh. What is this AMC? Where did they come from? My long story today, sheds some light
It's founder, Sandeep Tandon spent much of his past career in broking or trading in firms like ICICI Sec and his passion was derivatives. And this is the style he has brought with him (more below). He founded Quant Capital in 2007 and after some iterations it became an AMC
What sets it apart? A huge spend on data, a huge reliance on models (as opposed to fund managers) and a model that is constantly refined. Tandon collects data on a huge number of variables, including things like climate change and sentiment and builds it into his software
Quant's model is such that it keeps buying and selling, constantly churning its portfolio. This approach is hard to evaluate - except through the prism of returns. And those came in spades in 2020. Quant Small Cap gave a 92% in 2021 after 76% in 2020, far above the category
More interestingly it represents a challenge to the dominant 'buy and hold' approach and 'bottom up' style of stock selection in India's mutual fund industry. If the fund house thrives in this year's bearish market, competitors will be forced to sit up and take notice.
How should you think about Quant? It's like buying a prop trading desk in the clothing of a mutual fund. You can get outperformance but there will be lots of volatility and the model can go awry. If you can stomach this sort of ride - well some investors are dipping their toes
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