Reliance to Launch Quant Mutual Fund

Reliance Capital Asset Management Ltd will convert its index fund into a quant fund with effect from April 18, the firm said in a notice recently. Reliance Index Fund will give way to Reliance Quant Plus Fund that will invest at least 90 per cent of the assets in an actively managed portfolio of 11 to 15 stocks from S&P CNX Nifty index on the basis of a mathematical model. The model will shortlist stocks on the basis of stock price movement and financial/valuation aspects, the fund house said. Those not willing to accept changes can redeem units without paying any exit load from March 18 to April 17, it added. Quant Funds are funds that select the stocks in their portfolio on the basis of quantitative analysis. The fund managers managing these kinds of funds generally design a mathematical method based on which the stocks are taken in their portfolio. The model is developed on the basis of mathematical and statistical parameters. Reliance Mutual says that they have an in-house model which they are developing by looking at various parameters such as valuations, earning sentiments, price, momentum and share holders' value. They would also keep the portfolio's sector weightage in line with the Nifty's sector weight. However, in exceptional case this may be 20 per cent higher or lower. India's only quant fund from Lotus India Asset Management (Refer to Lotus India AGILE Tax Fund) is down more than 25% so far this year. The fund has 11 large cap stocks in its portfolio with about 6 to 10 per cent of holding in each. 97 per cent of its holdings are in large cap stocks. 70 per cent of the portfolio is invested in three sectors which are the Energy Sector, Metal & Metal products and Financial sector