Back in December 2007, Lotus India Mutual Funds launched India’s first “quant fund” called the Agile Fund. I use the term “quant fund” lightly when talking about Agile because it’s really an equity mutual fund dressed up. Most people would agree that a typical “quant fund” selects securities based on quantitative analysis, in agile they do that. However, their hands are tied because it’s a mutual fund, they can’t: go short, goto cash, derivatives or leverage. In essence they are stuck only going long in equities, when the product was launched in Dec 2007 it seemed like a good idea.
Their methodology is the model picks the top 11 stocks and investments are made in them on equal weighted basis. 9% of the total corpus is invested in each of these 11 stocks and the remaining 1% will be kept debt and money market instruments.
Well 6 months later how is the strategy working?
Sensex (Jan 1, 2008 to June 30) is down -33.4%
Agile (Jan 1, 2008 to June 30) is down -42%
I’m not saying all quant funds deliver performance but Agile is so limited in what it can do, it’s definitely not a “quant fund.” It’s just great marketing wrapped around a sub-par methodology.
1 response so far ↓
1 Balaji v // Jul 2, 2008 at 11:53 am
Hi,
Liked the comment - “great marketing wrapped around a sub-par methodology”. Makes me feel that at least our efforts on marketing the product as “India’s first quant based mutual fund” has worked well.
Incedentally was the marketing manager at Lotus who worked on positioning the product.
Cheers,
Balaji
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