Quantitative fund

A Quantitative fund is an investment fund that selects securities based on numerical data obtained through quantitative analysis. These funds are categorized as non-traditional and passive, utilizing customized models and software programs to make investment decisions.

Supporters of quant funds believe that employing inputs and computer programs for investment selection helps reduce risks and losses associated with human fund managers.

Quant funds rely on algorithmic or systematically programmed investment strategies, excluding the use of human managers’ experience, judgment, or opinions in decision-making. Instead, they employ quantitative analysis, hence the term “quantitative funds.” While quant funds can be one of several investment options offered by asset managers, they can also serve as the primary focus for specialized investment managers.

The expansion of quant funds has been fueled by increased access to a wide range of market data and the proliferation of big data solutions. Financial technology advancements and automation innovations have significantly broadened the data sets available to quant fund managers, enabling more comprehensive analysis of scenarios and time horizons.

As traditional fund managers struggle to outperform market benchmarks over time, larger asset managers have shown interest in increasing their investments in quantitative strategies. Smaller hedge fund managers also contribute to the overall quant fund offerings in the investment market. Consequently, quant fund managers seek individuals with accredited academic degrees and strong technical expertise in mathematics and programming.

Quant funds utilize sophisticated programming and quantitative algorithms with numerous trading signals, including economic data, global asset trends, and real-time company news. They also develop complex models around momentum, quality, value, and financial strength using proprietary algorithms implemented through advanced software programs.