Tata Mutual Fund intros AI and ML powered Quant Fund

Tata Mutual Fund has launched 'Tata Quant Fund' an Artificial Intelligence (AI) and Machine Learning (ML) powered fund. This fund employs a proprietary quant framework that combine multiple rule engines and predictive models to create investment portfolios that are aimed at maximizing returns during up-trending markets while minimizing losses during down trending phases.

Broad and persistent factors of stock returns are used for building rule engines for portfolio creation. Each rule engine uses scoring to create concentrated portfolios with attributes like 'value', 'quality', 'momentum', 'size' and couple of combination attributes. Thereafter the ML powered predictive algorithms decide basis prevailing market and macro-economic conditions, portfolio with which attribute is likely to outperform during the next month. The algorithms also predict absolute direction (positive or negative) of return for the next month. Long position in selected portfolio is taken only for months where predicted return is positive. During months where predicted returns are negative, the strategy uses derivatives to hedge the gross long equity position held previously. Tata Quant Fund portfolios are rebalanced monthly for optimal performance at low risks.

The predictive engines use more than past 20 years of market and macro-economic data to analyse hidden relationships and patterns. These correlations along with prevailing market and macro-economic data are then used by the engines for making monthly predictions. Thus, the investment decision making process of the fund is fully machine driven and free of human judgement.

Prathit Bhobe, MD & CEO, Tata Asset Management said, "Machines have massive computational power needed to process very large data sets, spot patterns and correlations, make decisions faster, objectively and without human biases. In the current world, computers are powerful enough to solve problems, a lot of data is available and we strive to use this data in combination with algorithms to its best".

The minimum application amount for this fund is Rs. 5,000/- and in multiples of Re.1/- thereafter and additional investment of Rs 1,000/- and in multiples of Re 1/- thereafter.

The fund will be managed by Sailesh Jain, Fund Manager, Tata Asset Management.

Tata Quant Fund is available with its digital channel partners Paytm Money & Groww App.