What exactly is a quant mutual fund?
Last week, Axis Mutual Fund launched a new scheme, Axis Quant Fund. In a regular MF scheme, a fund manager decides which stock to buy or sell. But in a quant fund such decisions are automated. The fund creates a set of rules based on which it buys stocks. Rules are also set to trigger a sale of its stocks. Or it simply sells them when they fail to meet the criteria. Quants are passive funds, but are slightly different from index funds and ETFs. Quant funds don't follow any indices; they follow the rules created by AMCs. Fund manager risks are eliminated, but models might undergo slight tweaks over time as new market patterns emerge.