AlphaGrep eyes edge in mutual funds with quant-driven strategies

Set to launch multi-asset fund next week

AlphaGrep Investment Management (AIM), the latest entrant to the mutual fund (MF) industry, is betting on its quantitative investing capabilities to stand out in the crowded asset management space.

 

According to Bhautik Ambani, chief executive officer (CEO) of AlphaGrep MF, the schemes launched by the fund house across the MF and specialised investment fund (SIF) platforms will utilise the AlphaGrep group's quantitative investing capabilities developed over the past 16 years.

 

"Quantitative investing is in our DNA. Everything we have managed over the last 16 years has been built around algorithms and statistical models. The experience of investing across asset classes and geographies gives us an edge in developing strategies for retail investors," Ambani said.

 

Quantitative investing has emerged as a fast-growing segment within the asset management industry in India, with several fund houses building capabilities and launching such schemes.

 

According to Ambani, advances in technology and the wider availability of market data are steadily reducing the information advantage traditionally enjoyed by discretionary fund managers, creating greater opportunities for data-driven investing. The AlphaGrep group, which currently manages around Rs 10,000 crore of assets across its verticals in India, the UK and China, has a research team comprising nearly 250 researchers and over 120 technology professionals, he said.

 

A common criticism of quantitative investing is "overfitting", where models perform well on historical data but fail to deliver similar results in live markets. The long-term track record, Ambani said, will allow the fund house to avoid this issue.

 

"Backtests alone are never enough. Our models are first validated through extensive out-of-sample testing before they are deployed. We have also seen our live PMS and alternative investment fund strategies perform broadly in line with what our historical testing suggested, giving us confidence in the robustness of our process," Ambani said.

 

The firm is set to begin its MF journey with a multi-asset fund, which is scheduled for launch next week. The fund house is also planning to launch schemes in other categories such as flexi-cap.