Aditya Birla Sun Life launches an Auto Pilot Fund: Aditya Birla Sun Life Quant Fund – Details Inside

Aditya Birla Sun Life just launched a new mutual fund scheme called Aditya Birla Sun Life Quant Fund. This is an open-ended thematic equity fund that aims to grow your money over the long term by investing in stocks based on a quantitative model. It opened for investment on June 10, 2024, and will accept applications until June 24. The minimum investment is only ₹500 so it is a good option if you are looking to start small. Just remember, like any stock investment, this fund carries a very high level of risk.

What is a Quant Fund?

Investment funds that make decisions based on quantitative analysis and algorithms are known as quant funds. Instead of relying on human judgment, it utilizes mathematical models and statistical techniques to determine investing prospects and execute trades by data-driven signals. Its purpose is to increase transparency and eliminate emotional biases while ensuring uniformity as well as risk control during investments.

Quant investing offers several benefits:

enhanced transparency due to rule-based decision-making, making it easy to identify performance reasons and improve models; emotion-free investment, unaffected by greed or fear; flexibility through proprietary signals; repeatability via back-tested, rule-based approaches; disciplined exits with pre-defined rules for entry and exit; and better risk management through constant monitoring by both humans and machines.

Aditya Birla Sun Life Quant Fund

The investment objective of the Aditya Birla Sun Life Quant Fund is to generate long-term capital appreciation by investing in equity and equity-related securities based on the quant model theme.

This quant fund uses "Auto Pilot: Need Based Intervention by Fund Manager," which depicts an automated investment process with the fund manager's oversight. The process starts with the fund manager defining the investment universe (securities pool) and designing a quantitative model for stock selection. The autopilot zone then takes over, monitoring the chosen stocks.

However, the fund manager may intervene due to the potential negative impact of large buy/sell orders or challenges in managing large security volumes. Corporate actions requiring stock sales can also trigger intervention. Overall, the portfolio strives to follow the quantitative model over time.

Benchmark - NIFTY 200 Index

The primary reason for formulating the NIFTY 200 Index was to track the manner of performances and patterns shown by companies with mid and large market capitalization rates. It is worth noting that NIFTY 200 combines all companies listed on both NIFTY 100 and NIFTY Full Midcap 100 indexes. This index is to aptly match funds in Quant Theme.

Who Manages the Scheme?

Mr. Harish Krishnan has as an experience of nearly 20 years in the Asset Management industry, both domestically and internationally. Prior to joining Aditya Birla Sun Life AMC Limited (“ABSLAMC”) as the Co-CIO and Head Equity, he was associated with Kotak Mutual Fund for more than 10 years as Senior Fund Manager - Equity. He has also worked at Kotak Mahindra (UK) Limited where he managed offshore funds based out of Singapore and Dubai. He holds a Bachelor’s Degree in Engineering from the Government College, Trichur and has done his PGDBM from IIM Kozhikode. He is also a Chartered Financial Analyst from CFA Institute, USA.

Conclusion

The Aditya Birla Sun Life Quant Fund offers a sophisticated investment approach, blending automated, data-driven strategies with expert oversight. It targets long-term investors seeking diversified equity exposure through a quantitative model. With a low entry barrier and potential for substantial returns, it is well-suited for those willing to accept higher risks for potential rewards.