What is Quant Fund

👉Today I am going to tell you about a Special Category of Mutual Fund i.e. Quant Fund. The concept of Quant Fund is becoming popular day by day. 

There are 2 type of fund analysis i.e. Quantitative Mutual Fund Analysis and Qualitative Mutual Fund Analysis. The Quantitative Mutual Fund also known as Quant Fund.

Quant Fund

Quant Fund follows a data-driven approach

Quant Fund follows a data-driven approach for stock selection or investment decisions based on a pre-determined rules or parameters using statistics or mathematics based models. Contrary to an active fund Manager who selects the quantum and timing of investments i.e. entry or exit, this fund completely rely on an automated programme for making decision for quantum of investment as well as its timings. 

It does not mean that there is no human intervention at all, the Fund Manager usually focuses on the robustness of the Models in use and also monitors their performance or some modification is required. 

Difference between Quant Fund manager and Index Fund Manager

Sometime a Quant Fund manager is confused with Index Fund Manager but it is not so as the Index Fund Manager may entirely hands off the investment decision purely based on Index, while Quant Fund Manager often designs and monitors models that throw up the choices. 

Advantage of Quant Fund

• The main advantage of Quant Fund is that 
• It eliminates the human biasness and subjectivity. 
• It using model based approach 
• Also ensures consistency in strategy across the market conditions. 
• Since the Quant Fund normally follows passive strategy, the exposure ratio tends to be lower. 

Since Quant Fund uses highly sophisticated strategies investors who well understand Stock Valuation methods, different stock picking styles, the market sentiments and derivatives etc. should invest in the same. 

Further since Quant Fund are tested on the basis of historical data and past trends though cannot altogether be ignore but also cannot be used blindly as good indicators. Thus, overall it can be said that whether it is human or a machine it is not easy to beat the market.