Axis Quant Fund Review

Published: June 11, 2021 at 11:09 am

Last Updated on August 30, 2021

Axis Quant Fund is an open-ended equity scheme following a quantitative model. The fund is currently in its NFO period: 11th June to 25th June 2021. In this review, we discuss the model used by the fund and whether it makes sense to invest in this.

A quant fund uses a mathematical model to either choose stocks/bonds or decide the portfolio’s asset allocation. Axis Quant Fund belongs to the former category. We have discussed these funds in detail: Can we invest in Quantitative Mutual Funds (Quant Mutual Funds)? Also, see: Tata Quant Fund Review: Is AI necessary to beat the market? And DSP Quant Fund Review.

Quat models like 200 DMA, PE, momentum etc., to define asset allocation as used by dynamic asset allocation funds and balanced advantage funds have a reasonably clear strategy. However, the fund houses tend to keep changing models.

Axis claims in the scheme presentation that the quant model offers “Better risk-adjusted robust performance”, “Performance across market cycles”, and “robust investment process”. If that is the case, what about their existing diversified equity funds, which are at least not official “quant”?!

There are well-known quant models for stock selection like factor-investing, which we have covered extensively (links below). However, AMCs are reluctant to introduce index funds tracking a simple factor such as low volatility. Instead, they prefer ETFs and introduce actively managed quant funds such as this new offering from Axis.

Actively managed quant funds mix quantitative and qualitative strategies for deciding stocks or asset allocation. This means the fund strategy is largely a black box and no different from any other actively managed diversified equity fund.

The scheme document of Axis Quant Fund says the fund will follow a “fundamental factor-based approach” (quality, growth and valuation) and mentions these as an “indicative list”: Return on Equity; Sales growth; Cash flow;  Debt to equity ratio; Earnings growth;  Price to book;  Price to earnings;  Dividend yield; Earnings yield. These factors would be combined in some manner to create a composite score.

Now, most stock investors would use parameters such as these! Does that mean they are following a “quant strategy?” All equity fund manager fund use these. Does that mean a flexi-cap fund or a small cap fund is also a “quant fund?”

The scheme presentation refers to “rule-based criteria”. Presumably, these refer to  Liquidity, Stock price momentum,  Volatility, Historical performance, beta, risk ratios. These factors will be used to create a risk score. The stock weights in the portfolio will depend on the composite score and risk score.

The scheme presentation (linked above) shows this backtest. The AMC claims the model fell less than the benchmark and recovered faster. The model’s drawdown is not significantly lower than that of the index, and any diversified fund that had different weights from that of the index would have recovered faster. See: Nifty 50 equal-weight index surges past Nifty 50 due to market rally. So there is nothing special about this.

Back tested draw down of the model used by Axis Quant Fund
Back-tested drawdown of the model used by Axis Quant Fund: Source Axis MF

In summary, we feel that there are too many unknowns in the semi-quant model of Axis Quant Fund. Many other Axis funds claim to buy “quality” stocks (Bluechip, long term equity). Active quant funds are too vague in design to warrant any serious consideration. We recommend that investors avoid Axis Quant Fund.

Resources to learn more about factor-based investing

Do share if you found this useful

Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 640 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! More than 2525 investors and advisors are part of our exclusive Facebook Group! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment! No recurring fees! Life-long access to videos in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course!  Increase your income by getting people to pay for your skills! More than 585 salaried employees, entrepreneurs and financial advisors are part of our exclusive Facebook Group! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos in an exclusive Facebook Group!   
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored three print books, You can be rich too with goal-based investing (CNBC TV18), Gamechanger, Chinchu Gets a Superpower! and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps