Tata Mutual Fund launches Tata Quant Fund

Top Quote A machine-driven mutual fund scheme that uses artificial intelligence to analyse prevailing market conditions and actively manage investment strategies. End Quote
  • (1888PressRelease) January 14, 2020 - Tata Mutual Fund has launched the 'Tata Quant Fund' an Artificial Intelligence (AI) and Machine Learning (ML) powered fund. This fund employs a proprietary quant framework that combines multiple rule engines and predictive models to create investment portfolios that are aimed at maximizing returns during up-trending markets while minimizing losses during down-trending phases.

    Open-ended equity mutual fund scheme following quant-based investing theme
    Medium to long term capital appreciation expected
    The fund would invest in equity and equity-related instruments which form part of S&P BSE 200 and Equity Derivative Segment
    NFO opens on 03 January 2020 and closes on 17 January 2020

    Broad and persistent factors of stock returns are used for building rule engines for portfolio creation. Each rule engine uses scoring to create concentrated portfolios with attributes like 'value', 'quality', 'momentum', 'size' and a couple of combination attributes. Thereafter the ML-powered predictive algorithms decide basis prevailing market and macro-economic conditions, a portfolio with which attribute is likely to outperform during the next month. The algorithms also predict the absolute direction (positive or negative) of return for the next month. The long position in selected portfolio is taken only for months where the predicted return is positive. During months where predicted returns are negative, the strategy uses derivatives to hedge the gross long equity position held previously. Tata Quant Fund portfolios are rebalanced monthly for optimal performance at low risks.

    The predictive engines use more than the past 20 years of market and macro-economic data to analyze hidden relationships and patterns. These correlations along with prevailing market and macro-economic data are then used by the engines for making monthly predictions. Thus, the investment decision-making process of the fund is fully machine-driven and free of human judgment.

    The machine learning predictive models also recalibrate and re-adjust at a fixed periodicity by using new and incremental data. This enables the models to factor in emerging patterns and relationships. These algorithms are developed and managed in-house by a dedicated team of data science specialists.

    We have come a long way from using a pocket calculator to analyze figures gathered from company reports to using machines that decide which stocks to be picked for investing.

    Prathit Bhobe, MD & CEO, Tata Asset Management said, "Machines have massive computational power needed to process very large data sets, spot patterns, and correlations, make decisions faster, objectively and without human biases. In the current world, computers are powerful enough to solve problems, a lot of data is available and we strive to use this data in combination with algorithms to its best".

    "Tata Mutual Fund has developed intelligent machine-driven strategies keeping in mind the appetite of long-term equity investors. This framework crunches massive amounts of data, recognizes patterns and leverages the power of technology. The future of investing is in the use of quants and with us entering a new decade, we believe that the Indian market is now ready for tech-based investing", says Sailesh Jain, Fund Manager, Tata Asset Management

    According to Utpal Sarma, Head Business Analytics, Tata Asset Management, "Actively managed funds benefit from human intelligence that learns, comprehends and responds to different market challenges in complex manners. Passively managed funds, on the other hand, are rule-based and they avoid pitfalls of biases that accompany human judgment. Their strength lies in increased objectivity and elimination of human errors. These traditional styles have contrasting pros and cons. AI and ML add a third dimension to fund management. They enable machines to mimic human judgment to a certain extent while retaining the benefits of disciplined rule-based investing. Investment strategies employing such constructs tend to leverage market opportunities better while avoiding bias errors. Technologies supporting artificial intelligence today is quite evolved and robust. Their wide usage across businesses is a testimony of their potential and capability. While quant strategies for wealth management features prominently in advanced markets, its only a matter of time that they gain popularity in India as well"

    The minimum application amount for this fund is Rs. 5,000/- and in multiples of Re.1/- thereafter and additional investment of Rs 1,000/- and in multiples of Re 1/- thereafter.

    The fund will be managed by Mr. Sailesh Jain.

    Tata Quant Fund is available with our digital channel partners Paytm Money & Groww App.

    About Tata Asset Management
    Established in 1994, Tata Asset Management Ltd is the investment manager for Tata Mutual Fund. It is among the oldest and most trusted fund houses in India with an investor base of over 19 lakhs (as on 30th November 2019). Tata Mutual Fund takes pride in managing the investments of the common man right from childhood to retirement. It offers a wide choice of funds for every need across the entire risk-return spectrum. These include equity funds, hybrid funds, and fixed income funds.

    For further information, contact:
    Heena Uttamchandani
    Tata Asset Management
    Corporate Communications
    Tel: 022 66578243 / huttamchandani ( @ ) tataamc dot com

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