On the 3rd of January 2020, the very trusted Tata AMC launched a new fund offer (NFO). This fund offer is called Tata Quant fund. It is an open ended scheme which will invest in equity and other equity related instruments. This Quant fund is the talk of the market currently owing to its relation with Artificial Intelligence.
The development of the Quant fund is a recent phenomenon. It’s the paragon of the evolution of the mutual fund market.
Wondering how a Quant Fund works?
A Quant Fund is an investment scheme that uses Machine Learning (ML) in order to construct optimal portfolio for investment. The mathematical or statistical model uses a set of predetermined information (historical data) in order to predict the investment outcome. Some of the best features of a Quant Fund are:
- Use the strength of AI and ML for Investment Strategy Formulation.
- Ability to Handle massive computational intensity for stock selection and allocation.
- Reduce Human error, emotion and bias.
- Algorithm based stock selection means a limited number of stocks.
- Consistency in Strategy.
- Disciplined Investment Process, offering superior risk control.
What is the role of the Fund Manager?
With the usage of Machine learning and Artificial Intelligence, the work of the Fund manager in case of Quant funds is minimized. He is nonetheless involved in designing the larger portfolio and monitoring the progress.
What are the features of the Tata Quant Fund?
The Tata Quant fund incorporates all the vital features of a Quant fund. The use of Artificial Intelligence makes for a better and more sustainable investment model. Some of the exclusive features of this fund are:
- Minimum amount: The minimum amount for investment is Rs.5,000 and from thereon in multiples of Re.1.
- Objective: The objective of the investment will be to create medium to long-term capital appreciation by investing in equity and other related instruments.
- Asset allocation: The Fund would invest in stocks which form part of S&P BSE 200 or Equity Derivative Segment stocks.
- Type: It’s an Open ended scheme.
- Loads: Nil entry load during the NFO period and an exit load of 1% of NAV, if redeemed on or before expiry of 365 days from allotment date.
- Fund manager: Mr. Sailesh Jain (He has over 15 years of experience in the mutual fund industry).
Why should you invest in Tata Quant fund?
Quant funds are a relatively new phenomenon in the market which leaves much to be explored. There are multiple reasons why you should invest in this one but the few best ones are:
- The fund aims to consistently generate better returns and avoid negative absolute returns.
- Machine learning will help in the daily evolution of the product as the data will be guided by the latest market trends ensuring that the fund objective is met.
- The portfolio re balancing is based on the latest data, so it will also help in improving portfolio performance and reducing risk.
Usage of AI and ML is the next best trend in the market. The world is going digital and we don’t see a reason why you should not be ahead of the curve. NFO closes on 17th January 2020.
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