April 19, 2024
Data model: How Quant Mutual Fund makes its investments

Quant Mutual Fund, which has a track record of six years, came into existence after Quant Capital acquired Escorts Mutual Fund. It manages 65,000 crore worth of assets and is the 20th largest fund house in the country.

Quant MF’s investment process begins with its data model first identifying stocks using various quantitative factors. The analyst team, which comprises of 18 members, does qualitative analysis by quantifying the companies on various parameters. The stocks are then presented to fund managers and the chief investment officer (CIO). The final allocation call is taken by the money management team, but the CIO, Sandeep Tandon, has the veto power. Tandon has 33 years of investment and research experience.

Most of Quant MF’s team has been working with Tandon before the mutual fund business was launched, on Quant’s broking and investment banking platform.

One of the senior money managers, Ankit Pande, has been associated with Quant Global Research from 2012 itself. Another, Vasav Sahgal, has been with the fund house since its inception and had joined Quant Global Research before the launch of the MF business. Quant MF also has a separate data analytics team,which refines the data model on continuous basis.

At Quant, money managers can choose stocks from the basket that their data model suggests but cannot override its suggestions, and exceptions are always on need basis.

Technology and data analytics play a key role at Quant MF, which also requires regular investments. Tandon has reportedly spent about 180 crore collecting wide-ranging data points including weather patterns, geopolitical happenings, and market sentiment analysis over the years.

The average age of Quant MF’s fund management team is 36 years (excluding Tandon who is 54).

According to Tandon, it is easier to mould younger people in Quant MF’s investment approach, which is very different from that used by other fund houses.

Tandon understands that running a fund house is also a people’s business. He says that Quant MF is still a young company (the fund house turned profitable last year), but he may in the future think of implementing policies aimed at talent retention.

Tandon adds that large organizations evolve over time and Quant MF will also evolve in a natural way as it gets larger.

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