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A Quant fund portfolio has securities that are chosen on the basis of numerical data compiled through Quantitative Analysis or Technical Algorithm. These funds are considered passive funds. They are built with customized models using software programs to determine investments.

The theory behind the quant fund suggests that choosing investments using inputs and computer programs helps fund managers to cut down on the risks and losses associated with it.

Salient Features

A quant fund makes investment decisions based on the use of advanced mathematical models and quantitative analysis

Managers utilize algorithms and custom-built computer models to pick their investments.

Investors are turning to and sticking with quantitative analysis within funds because of the rising availability of market data.

Although quant funds utilize state-of-the-art technology, the use of quantitative analysis isn't new.

Modus Operandi of a Quant fund

Quant funds rely only on algorithmic or systematically programmed investment modules. They don't use the experience, judgment, or opinions of human managers to make investment decisions. They use quantitative analysis rather than a fundamental analysis which is why they're also called quantitative funds.

Greater access to a broader range of market data fueled the growth of quant funds, not to mention the growing number of solutions surrounding the use of big data. Developments in fintech and increasing innovation around automation have vastly broadened the data sets quant fund managers can work with, giving them even more robust data feeds for a broader analysis of scenarios and time horizons.

Managers managing large assets have looked to increase their investment in quantitative strategies as fund managers struggle to beat market benchmarks over time. Smaller Hedge Fund managers also round out the total quant fund offerings in the investment market. Overall, quant fund managers seek talented individuals with accredited academic degrees and highly technical experience in mathematics and programming.

Quant funds typically run on a lower-cost basis because they don't need as many traditional analysts and portfolio managers to run them. However, their trading costs tend to be higher than traditional funds, due to a higher turnover of securities. Their offerings are also generally more complex than standard funds and it is common for some of them to target high-net-worth investors or have high fund entrance requirements.

Some investors consider quant funds to be among the most innovative and highly technical offerings in the investment universe. They encompass a wide range of thematic investment styles and often deploy some of the industryʼs most groundbreaking technologies

A Delhi University alumnus, Shirish Garg is a qualified chartered accountant with over two decades of professional experience. Starting his professional journey with Philips India, Mr. Garg has held key leadership positions in reputed organizations like JP Morgan, Credit Suisse, Deutsche Bank, and Standard Chartered Bank. Garg is the Group CEO of Loan Bazaar and Novel Homes. With his rich experience in financial services, Shirish ensures the service excellence of his organization, which includes debt synd

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