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Quant funds offer refreshing alternative to discretionary investing, says Rajiv Shastri of NJ Mutual Fund
Quant and factor-based funds cut through the noise by replacing gut feelings and personal biases with disciplined rules and data-backed strategies.
Factor-based funds are making their presence felt in India’s investment world, offering a clear, refreshing alternative to the chaotic landscape of discretionary investing, says Rajiv Shastri, CEO of NJ Asset Management.
In an interview with MintGenie, Mr Shastri shares his views on factor investing, gives tips for young investors who are starting their investing journey, and also shares his outlook for financial markets in the current year.
Edited Excerpts:
What is your outlook on financial markets in 2024-25?
Markets are expected to be influenced by key events like the Lok Sabha elections and the first post-election budget. Analysts believe pre-election volatility will likely continue, with potential interest rate cuts boosting market sentiment in the months after.
Foreign and domestic inflows could remain strong, with the anticipation of a reduction in global interest rates driving a return to Indian equities.
Over the past few years, there has been an increasing interest in quant funds and factor-based investing globally. Do you think quant funds/factor funds are gaining popularity in India, and what do you envision for their future in the Indian investment landscape
Quant and factor-based funds are making their mark in India’s investment world, offering a clear, refreshing alternative to the chaotic landscape of discretionary investing. These funds cut through the noise by replacing gut feelings and personal biases with disciplined rules and data-backed strategies.
ALSO READ | What are the strategies for building a diversified investment portfolio? MintGenie explains
Can you tell us how the ‘factor investing Olympiad’ exposes college students to factor investing?
The ‘Factor Investing Olympiad’ offered by NJ AMC helps inquisitive students delve into the realm of investing like a playground.
NJ AMC is providing students with the means to make more informed financial decisions by pushing them with real-world circumstances and stimulating their critical thinking regarding the fundamentals of disciplined investment.
Factor investing has gained significant attention in the investment industry. Can you explain how factor investing works?
Factor investing takes the idea that no single strategy is perfect and builds on it. Instead, it identifies the fundamental factors that historically offer strong returns: quality, value, momentum, and low volatility. Think of these as the four key guides for your portfolio:
Quality: Focuses on companies with stable, high returns on equity, generous dividends, and low debt.
Value: Hunts for companies trading below their intrinsic value.
Momentum: Rides the wave of stocks already on an upward trend.
Low volatility: Zeroes in on companies with a track record of stability, providing some cushion against market dips.
What advice would you give to young investors who want to start their investing journey now?
If you are just starting out as an investor, think of investing like planting a tree. You need to nurture your portfolio with care and patience, and it will grow strong over time. Start by prioritising quality investments that follow a clear, rule-based strategy, minimising the guesswork and anxiety that often comes with managing your money.
This kind of approach ensures your decisions aren’t swayed by market rumours or emotional reactions but are instead rooted in a disciplined process. The rules will guide you through market fluctuations and keep you focused on your long-term goals, no matter how bumpy the ride gets.
By sticking with a reliable strategy that doesn’t change with the seasons, you’ll be able to build a resilient portfolio that thrives over the years and helps you achieve the financial growth you’re aiming for.
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First Published:11 May 2024, 10:57 AM IST
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