SBI MF Introduces SBI Quant Fund: A Smart Investment Solution

SBI Mutual Fund has launched SBI Quant Fund, it is an open-ended equity scheme following Quant based investing theme.

The world of mutual fund investing is evolving rapidly, with technology and data analytics reshaping traditional approaches. One such innovation gaining traction is quantitative model-based investing, which uses algorithms, mathematical models, and historical data to drive investment decisions.

Unlike traditional funds where a fund manager relies on personal judgment and market expertise, quant funds focus on systematic and unbiased stock selection, offering a fresh perspective in managing portfolios.

[Read: Best Thematic Mutual Funds for 2025: Power Up Your Portfolio]

Amidst this backdrop, the launch of the SBI Quant Fund NFO (New Fund Offer) marks a significant step in bringing quantitative strategies to a broader investor base in India. As one of the leading mutual fund houses in India, SBI Mutual Fund's venture into this space reflects the growing recognition of quant-based investing as a viable option for retail and institutional investors alike.

What will be the investment strategy for SBI Quant Fund?

SBI Quant Fund aims to generate long term capital appreciation by investing in equity and equity related instruments selected based on quant model theme.

The investment strategy outlined aims to achieve long-term capital appreciation by deploying a proprietary quantitative model that incorporates both fundamental and technical factors. This approach is designed to generate superior risk-adjusted returns compared to the benchmark index.

The model employs a multi-faceted evaluation process, screening the investment universe for quantitative measures such as data availability and liquidity, and subsequently analysing stocks based on a set of fundamental and technical parameters. The quantitative model focuses on fundamental factors that provide insights into a company's growth outlook and valuation. These factors may act as an overarching framework. Some of these factors are -

• Value

• Quality

• Growth

The fund manager will review and maintain the model (including variables) on an ongoing basis and make changes as necessary. The same will be reviewed periodically by the Fund Manager.

With continuous oversight the fund ensures that the model remains effective in capturing market dynamics and adapting to changing conditions. By integrating fundamental and technical factors and allowing for adjustments in response to market changes, the strategy seeks to deliver sustained long-term capital appreciation while effectively managing risk.

How will the scheme allocate its assets?

Under normal circumstances, SBI Quant Fund will hold an allocation of 80% to 100% in Equity and equity-related instruments related to momentum theme, 0% to 20% in Other Equity and Equity related instruments, 0% to 20% in Debt Securities (including securitized debt^ & debt derivatives) & Money Market Instruments (including Tri Party Repo) and 0% to 10% in Units issued by REITs and InvITs.

Should investments in SBI Quant Fund be considered?

SBI Quant Fund employs a quantitative model for stock selection, leveraging mathematical algorithms and historical data to make investment decisions. This approach minimizes human biases, aiming for objectivity and consistency.

The scheme offers diversified exposure across market capitalizations and sectors, making it a potentially valuable addition for those looking to enhance their portfolio's breadth. The model-driven stock selection strategy could provide unique opportunities, especially in identifying quality stocks across different market scenarios.

However, investors must note that such funds may underperform during unexpected market shocks or periods of high volatility, where models might struggle to adapt quickly. The inherent volatility of equity markets, combined with the fund's reliance on algorithms, means returns can fluctuate significantly in the short term. Long-term investors, however, could benefit from the disciplined and unbiased stock-picking approach that quant funds are designed to offer.

[Read: Market Volatility: How to Build an All-Weather Winning Mutual Fund Portfolio]

Do note, quant funds like this require a clear understanding of their methodology and are best suited for investors comfortable with market volatility. Additionally, as an emerging strategy within Indian mutual funds, the lack of a long-term performance track record adds an element of uncertainty.

The SBI Quant Fund could be a good fit for those looking to diversify their portfolio with a modern, systematic investing approach.