Capitalmind’s mutual fund debut fund banks on algorithms rather than humans. 

In July, the portfolio-management-service firm launched its first mutual-fund scheme—a flexi-cap one driven by a quantitative, data-driven approach to investing. Factors its algorithm considers: momentum, value, profitability, and low volatility. Quant-based is how its future funds will be too. Data over discretion, so to speak.

“We don’t want to rely heavily on subjective calls made by fund managers,” said Deepak Shenoy, the founder of Capitalmind. The company just receivedBusiness Standard Capitalmind gets Zerodha's Rainmatter backing after MF debut success its first institutional funding through a Series-A investment from Rainmatter*, the fintech-focused initiative of Zerodha Broking Ltd.

Quant funds are not new in India. These data-driven mutual-fund schemes that use quantitative models and algorithms have existed in the country since 2008—when Nippon India Quant Fund was established.

Over the years, more fund houses entered the fray. The rush has accelerated in the recent past. SBI and UTI Mutual Funds launched their quant funds in December and January, respectively. Sundaram and Bandhan came out with their own multi-factor funds in July. Everyone, it would appear, wants to join in. 

But, two fund houses stand out. 

NJ Mutual Fund, promoted by the country’s largest mutual-fund distributor platform by AUM, introducedThe Ken The rapid climb and steady slide of top mutual-fund distributor’s $530M scheme its “rules-based active investing strategy” Balanced Advantage Fund in October 2021. But this struggled. In fact, its AUM actually fell from Rs 5,200 crore in 2021 to about Rs 3,800 crore now—inspite of the 30,000-strong army of distributors at its disposal. The five schemes of this quant house put together have gathered just about Rs 7,000 crore so far. 

Contrast this with Quant Mutual Fund, established in 2018—a giant that’s bucked the trend. The fund boasts nearly Rs 1 lakh crore in AUM across its 26 schemes as of June. 

But it’s an outlier. Exclude Quant MF, and all quant funds put together manage assets worth just about Rs 14,000 crore, according to data from wealth-tech platform Fisdom.