'That only fundamentals matter in investing is a big myth'

How is your team viewing the current market valuations and preparing for possible corrections?

At quant, our predictive analytics showcase complacency in the US markets and gold. In India, market participants are more sceptical, though not fearful. Here, valuations are high and relatively stretched compared to EMs (emerging markets), particularly China. Yet, absolute valuations are not as expensive to say that the Indian markets are peaking out.

We propagate the decadal bullish investment thesis and believe opportunities continue to abound. Our 'Perception Analytics' show that India's P/E ratios or valuations will remain elevated. Further, our data shows that macro risks are more tilted towards global developments than India. So, we expect our buy-on-dips strategy to remain effective in the near term.

Our investment team manages risks to protect investors' capital from significant losses. quant's dynamic sector rotation strategy, powered by our VLRT framework (Valuation Analytics, Liquidity Analytics, Risk Appetite Analytics and Timing Analytics), helps reduce downside risk. We look at known, unknown and even perceived risks. We are building positions in large caps and more liquidity-focused segments wherever risk exposure is warranted.

Are index and factor-based passive funds a fad or a lasting investment strategy?

At quant, we believe we live in a world where data points are dynamic, and the money management style cannot remain static. Factor-based passive funds are a part of the static money management style. The coming decade will belong to active money managers, and we'll focus on expanding our active fund offerings. During periods of market volatility, a truly active fund house like ours will outperform benchmarks. While there are new product launches in factor-based passive funds, that's not to say they'll outperform or create value.

Will AI impact your business? How and why?

AI can help make better quality decisions on a bigger scale, execute trades at lower impact costs, and help retail investors opt for an appropriate scheme.

Rapid-fire questions

• If your fund house had a superpower for investors, what would it be?
  Timing our trades perfectly.
  
• The biggest mutual fund myth you'd debunk.
  That only fundamentals matter in investing.
  
• An unconventional asset class you'd add to your portfolio.
  Virtual currencies.
  
• A Bollywood movie that best represents the mutual fund industry today.
  Ek Ruka Hua Faisla.

This article was originally published on November 05, 2024.