Quant MF CEO says, 'For us, timing is everything,' days before front-running allegation

Boasting over 27 years of experience in the capital markets, Sandeep Tandon is a known name in the industry. Previously, he has held positions at various reputed financial services firms, including GIC Mutual Fund, IDBI Mutual Fund, ICICI Securities and Kotak Securities. In an exclusive conversation with Value Research, the CEO and Director of Quant Mutual Fund sheds light on the strategic use of predictive analysis in forecasting market trends. Further, he also addresses the prevailing market speculation and leverage, noting that both are currently minimal. Here are some interesting snippets from the interview. Can you explain your investing framework? Our VLRT (Valuation, Liquidity, Risk Appetite, and Time) framework is a risk mitigation investment framework. Let's understand that from a market point of view when we talk about certain data points. In September 2021, the technology stocks peaked, and based on our analytics, we saw extraordinary hype and exited the sector. The market realised this six months after we exited, but stocks were down by 30 per cent by then. One-and-a-half years later, they were down by 50-60 per cent, so if you didn't sell at the right time, your risk assessment and timing were bad. I believe that the biggest challenge of valuation analysis, which most people do today, is that most valuation metrics depend on one dependent variable called the stock price. So, when the price fluctuates, you keep changing your views. Now, we have to remove those human biases. How? In our VLRT framework, we allot one-third of the weight to valuation analytics, one-third to risk appetite (which is sentiment data) and one-third to liquidity analytics. Even for us, timing analytics is a risk mitigation tool. Let's take an example from the Covid-19 period. When t