IIFL Quant Fund: Should you invest?

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A variety of factors influences investors’ mutual fund choices. The preference for a good mutual fund does not end at having a substantial fund performance; it also includes funds that harness technology and give investors a solution based on lower costs.

A quant fund is one in which all investment choices, including stock selection and portfolio construction, are made strictly based on pre-determined rules based on a combination of one or more parameters such as valuations, profitability, growth, volatility, and so on. They use a method that involves using a variety of time-tested elements to select the correct securities and build a portfolio in a methodical manner.

Quant Funds, also known as quantitative funds or ‘factor-based investing, are not new to the market. Quant Funds as a product have already acquired traction on a global scale, as more and more investors seek creative, low-cost methods to outperform the market. Recently, IIFL Asset Management announced the launch of IIFL Quant Fund. This is a quantitative rule-based, actively reviewed fund.

Fund strategy

IIFL Quant Fund, with a systematic approach to portfolio construction, aims to invest in quality stocks that have secular growth or defensive characteristics. The IIFL Quant Fund will be rebalanced and reviewed on a regular basis. The New Fund Offer (NFO) will began on November 8, 2021, and ends on November 22, 2021.

The fund’s investment objective is to provide investors with long-term capital appreciation through a portfolio of equity and equity-related assets with a Quant theme.

Based on quantitative portfolio design methods and procedures, quality stocks will be screened. The IIFL Quant Fund allows investors to diversify their portfolios by investing in a variety of areas.

Management views

Due to the fund’s quantitative restrictions are mainly guided by investment process rather than discretion, avoiding market cap and behavioural biases. The fund’s methodology and portfolio construction are also validated and back-tested overtime periods. The S&P BSE 200 TRI will serve as the fund’s benchmark.

“Based on a quantitative model, the strategies of the IIFL Quant Fund are fully systematic and rule-based and would have additional filters for selecting quality momentum stocks. The fund universe will include the Top 200 stocks by market cap and liquidity,” explained Parijat Garg, Fund Manager, IIFL AMC, who will manage the IIFL Quant Fund.

What should you know as an investor?

The scheme falls under the ‘Very High’ risk category of fund, and investors should consult their advisors to check the product suitability.

The fund is for investors who have an investment horizon of at least 5-7 years.

The exit load is 1% if redeemed/switched out on or before 12 months from the date of allotment.

Minimum investment amount is Rs 1000/- and in multiples of Rs 100/- thereafter.