(Article by Karthik Kumar, Portfolio Manager- Alternative Equities, Axis AMC)


As asset management industry has grown, the product offering too has expanded in scope from traditional large cap / mid cap / flexi cap funds to relatively evolved offerings across platforms including mutual funds, PMS and AIF’s. This increase in the breadth of product profile has provided investors with better avenues that address their requirements. The latest addition to this list are Quantitative Funds that while being at a nascent stage are beginning to get investors’ attention.

Quantitative methodology employs a systematic approach of investing, that is data intensive and leverages on insights from mathematical & statistical models. With increased depth in our markets and a longer history these products are well positioned to take off. Unlike popular perception these are not based on price action alone but also can integrate bottom-up stock level data on growth, valuation, earnings impact, minority shareholder treatment etc.

Further, it can be employed to manage range of strategies from Low cost (Smart Beta) portfolios to full-fledged active long only, Long-short & Managed futures strategies.

We have been practising quantitative strategies in our markets and can state confidently that the approach is robust and can perform well across cycles. Aside from being a unique offering other advantages of a quantitative process includes ability to monitor a broad cross section of stocks and an integrated risk management system.

We have been working on quantitative solutions at Axis Asset Management Private Limited (“Axis AMC”) and below is output for a long-only strategy benchmarked to BSE 200 based on historical back-test from 2007-2020.

Source: Axis AMC Internal Research |  Returns as of Dec ‘21

It not only had superior returns but also lower risk, lower beta and better Sharpe ratio. We have been managing live money at Axis AMC using this approach since mid-2021 and our experience is in line with the back-test results.

We believe that these strategies not only capture newer sources of return but also do a great job in adding diversity to a client’s portfolio and hence investors may actively consider adding these strategies to their portfolio.

Lastly, we at Axis AMC have built a product suite based on a quantitative approach and would encourage interested parties to reach out for further details.

RISK DISCLAIMER: Investments are subject to market-related risks. This write up is meant for general information purposes and not to be construed as any recommendation or advice. The investor must make their own analysis and decision depending upon risk appetite. Only those investors who have an aptitude and attitude to risk should consider the space of Alternates (PMS & AIFs). Past Performance may or may not be sustained in the future and should not be used as a basis for comparison with other investments. Please read the disclosure documents carefully before investing. PMS & AIF products are market-linked and do not offer any guaranteed/assured returns. These are riskier investments, with a risk to principal amount as well. Thus, investors must make informed decisions. It is necessary to deep dive not only into the performance, but also into people, philosophy, portfolio, and price, before investing. We, at PMS AIF WORLD do such a detailed 5 P analysis.


Do Not Simply Invest, Make Informed Decisions

imageBook a call with our Experts