Quant to me follows a more of a short term trading style of stock picking preferring momentum and timing over any long term fundamentals.
Their portfolio churn is the highest and they change stocks and their weightage every 2 months as soon as they start flatlining or declining. The average holding period for them is probably 12-14 months.
And they don’t seem to have any clear strategy, swinging with moods and direction of market. A few months ago their senior executive made a statement about not touching banks (specifically large ones) and now they have added HDFC and Kotak to their portfolio. Similarly on the day of exit poll when market was 3-4% up, they issued a very bullish statement about psu stocks (PSU index was some 6% up that day), highlighting high concentration of psu stocks in their portfolio holdings. The very next day when the market crashed and general optimism around psu stocks took a beating many psu stocks from Quant’s portfolio either disappeared or were trimmed.
They have been very bullish on Reliance having added that to their portfolio, giving it the biggest allocation, 6 months ago but let’s see what happens now as stock hasn’t performed in last 3-4 months.
This strategy may work with small AUM, but as AUM increases the transaction as well impact cost will also increase, making it difficult to follow the momentum trading style. We have enough data points in investment to show that timing the market requires more luck than skills. So far jury is still out on whether Quant has been enjoying the rub of the green or they actually have found a secret formula to predict the market movement.
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