Dhirendra Kumar makes a case for active management over algorithm-based quant funds
Would you suggest investing in algorithm-based quant funds, besides multi-cap funds? Are such types of funds value-oriented?
I would say that none of the algorithm-based strategies are old enough that one can say with confidence that they work in a sustained way. Although some might work over a period of time, we still have to see how they progress. Also, all of them might turn out to be nice and convincing stories to begin with, but they need to really prove themselves.
Most of these funds are value or growth-oriented. One advantage of any algorithm-based strategy is that these funds will continue with their strategy all the time. So, there's great predictability in terms of what they will be doing.
But I haven't come across any algorithm-based quant strategy that is being implemented with great rigour over a long period of time and consequently, has been able to stand out with long-term performance. So, I think, for now, active funds stand a chance over algorithm based strategies.