SBI Mutual Fund Launches SBI Quant Fund: A Data-Driven Approach to Investing .SBI Mutual Fund has introduced the SBI Quant Fund, an open-ended equity scheme designed to provide long-term capital appreciation through advanced quantitative analysis. This fund leverages data-driven models to make investment decisions, aiming to eliminate human biases.
The New Fund Offer (NFO) is open for subscription until December 18, 2024, with a minimum investment of ₹5,000.
About the SBI Quant Fund NFO
The SBI Quant Fund NFO launched on December 4, 2024, and follows a quantitative investing strategy. The scheme will be benchmarked against the BSE 200 TRI (Total Return Index), which represents the performance of the top 200 companies listed on the Bombay Stock Exchange.
For instance, if the BSE 200 TRI delivers a 10% annual return, the SBI Quant Fund will aim to generate returns in line with or better than this benchmark using its data-driven approach. After the NFO period, the fund will reopen for continuous sale and repurchase within five business days from the allotment date.
What Are Quant Funds?
Quant funds rely on mathematical models, statistical techniques, and algorithms to identify investment opportunities. Unlike traditional mutual funds where fund managers make decisions based on market insights, quant funds base their decisions purely on data.
Example:
Consider a quant fund that uses a model to analyze thousands of stocks across various parameters like earnings growth, price momentum, and volatility. If the model identifies that Company A has a consistent earnings growth rate of 20% and low price volatility, it might allocate funds to Company A. Conversely, if Company B shows declining earnings despite positive market sentiment, the fund might avoid it—even if human analysts are optimistic about its prospects.
This approach reduces the influence of human emotions like fear and greed, leading to more objective investment decisions. You can read more details on What are Quant Funds here.
Investment Details
- Minimum Initial Investment: ₹5,000 (and in multiples of Re 1 thereafter).
- Example: An investor can start with ₹5,000 or ₹5,001, ₹5,002, etc.
- Minimum Additional Investment: ₹1,000 (and in multiples of Re 1 thereafter).
- Example: If you want to top up your investment later, you can do so with amounts like ₹1,000, ₹1,500, or ₹2,000.
- Minimum Redemption Amount: ₹500 or 1 unit (whichever is lower), or the entire balance.
Investment Objective
The primary objective of the SBI Quant Fund is to generate long-term capital appreciation by investing in equity and equity-related instruments selected through quantitative models.
Example:
The fund may allocate a significant portion of its assets to sectors like technology, finance, or healthcare if the data models suggest these sectors are likely to outperform.
Asset Allocation
The fund’s assets will be allocated as follows:
- Equity and equity-related instruments: 80-100%
Example: If the fund manages ₹100 crore, it may invest ₹80 crore to ₹100 crore in stocks selected based on the quantitative model. - Other equity and equity-related instruments: 0-20%
- Debt securities (including securitized debt and debt derivatives): 0-20%
Example: To reduce risk, the fund might invest ₹5 crore in government bonds. - Money market instruments (including tri-party repo): 0-20%
Example: If market volatility increases, the fund may temporarily shift ₹10 crore into safe money market instruments. - Units of REITs (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts): 0-10%
Key Information about the SBI Quant Fund NFO
- Launch Date: December 4, 2024
- Last Date for Subscription: December 18, 2024
- Scheme Category: Equity – Thematic Fund
- Benchmark Index: BSE 200 TRI
- NFO Price: ₹10 per unit
- Minimum Initial Investment: ₹5,000 and in multiples of Re 1 thereafter
- Minimum Additional Investment: ₹1,000 and in multiples of Re 1 thereafter
- Minimum Redemption Amount: ₹500 or 1 unit (whichever is lower) or the entire balance
Exit Load
An exit load of 0.5% of the applicable Net Asset Value (NAV) will be charged if units are redeemed or switched out within six months from the allotment date.
- Example: If an investor redeems ₹1,00,000 worth of units within three months, they will incur an exit load of ₹500.
No exit load will be charged if units are redeemed or switched out after six months.
Fund Management
The SBI Quant Fund will be managed by experienced fund managers Sukanya Ghosh and Pradeep Kesavan.
Example of Fund Manager Expertise:
Sukanya Ghosh, who has previously managed successful equity funds, will focus on ensuring the fund adheres to its quantitative strategy. Pradeep Kesavan, with his background in quantitative finance, will oversee the algorithmic models that drive investment decisions.
This fund is suitable for investors who:
- Are seeking long-term capital appreciation.
- Prefer a data-driven investment strategy over traditional fund management.
- Can tolerate moderate to high risk associated with equity investments.
Conclusion
The SBI Quant Fund offers a unique investment opportunity for those looking to benefit from the precision and objectivity of quantitative investing. With a clear focus on leveraging data to drive decisions, this fund can be a valuable addition to an investor’s portfolio, particularly in a dynamic and evolving market.
