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ING India bets on quant funds; eyes $285 mn

ING India bets on quant funds; eyes $285 mn

Mumbai: The Indian fund arm of ING aims to launch at least two quant funds in the domestic market, following the success of the strategy in the rapidly growing economy, and hopes to nearly quadruple quant fund assets to about $285 million in 2010.

Navin Suri, chief executive of ING Investment Management (India), said the new funds would target foreign and Indian investors and pick stocks globally.

Quant fund managers follow a set of mathematical techniques to evaluate risk, pricing and timing in financial markets, unlike those following fundamental and technical analysis that largely depend on subjective calls.

ING currently offers two quant funds investing in local shares under its Indian portfolio management services arm, better known as managed accounts globally, and has assets worth about Rs3.5 billion in the first year of their launch.

“I would expect us to be 1,200-1,300 crores (Rs12-13 billion) at least by the time we end the year," Suri said.

He said large distributors in India are marketing the quant funds to rich individuals. The asset management firm has also started marketing existing quant funds to foreign investors, Suri said.

ING hopes to directly market its quant funds to investors in Asia and the Gulf region.

ING’s quant funds currently have about 1,600 investors, with average ticket size of about Rs2 million.

“By the time we end this year, at least 20% of our assets will be from international investors," Suri said. Currently, they account for about 5% of the funds’ assets.

ING India Large Cap Quant Equity Portfolio rose more than 90% in 2009, outperforming the 76% return from its benchmark 50-share Nifty index.

ING India BSE-200 Quant Equity Portfolio, which is yet to complete one year, has given 31% return since launch versus 25% by its benchmark.

The money manager also expects a bigger interest in its existing globally invested products in 2010 as local investors, mainly the high net worth individuals, look to diversify.

ING, which launched India’s first global real estate as well as commodity fund, manages about Rs3 billion under its global funds in the domestic market and Suri said he expected to add another Rs3 billion in fresh inflows in 2010.

He said large distributors were preparing to seed client portfolios with global products.

“India has run up quite significantly...over the last 9-10 months and it’s unlikely that those kinds of returns will come again in that kind of timeframe," Suri said.

Indian shares rose 81% in 2009, to record their biggest yearly rise since 1991.

In December, ING domestic mutual fund unit managed about Rs15 billion, data from the Association of Mutual Funds in India showed.

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