In a press release today, DSP MF announced the launch of DSP Quant Fund, an open-ended equity scheme. A quant model with minimum human bias will drive the fund's stock selection and allocation.
For portfolio creation, the fund will follow a three-step process – elimination, selection and assigning weights. The scheme’s investment universe will consist of stocks in the BSE 200 index. The elimination process will screen out companies that have very high debt, excessive price volatility and inefficient capital allocation. The remaining companies will be ranked based on multiple factors that gauge quality, growth and value. Consequently, about 50 companies will be shortlisted. These companies will be assigned appropriate quantitative weights.
The scheme’s portfolio will be rebalanced bi-annually.
Speaking about the fund, Kalpen Parekh, President, DSP MF said, “Investing is a blend of art, which is the judgement and beliefs of fund managers, and the science of using these principles more consistently and reducing personal biases. The DSP Quant Fund is a mix of converting good investment principles, of having good companies at good prices held for long periods of time, into rules and then following these rules consistently without our personal biases. These rules have been tested for their effectiveness in generating better-than-benchmark returns. We are happy to bring a scientific equity product that respects the good investment principles that have generated durable alpha and designed in a model to minimise biases.”
Anil Ghelani, Senior VP, Head of Passive Investments and Products will manage the fund. BSE200 TRI will be the scheme’s benchmark.
