Quantitative investing is gaining visibility in India as fund houses and wealth managers introduce more strategies based on data, predefined rules and mathematical models. Unlike traditional investing, where fund managers may rely heavily on company research and individual judgement, quantitative strategies use measurable factors to make investment decisions.

The approach can bring greater consistency to portfolio construction, but it also has limitations.

Since many quantitative models are based on historical market data, their performance can vary when market conditions change.

How quantitative investing works

Quantitative strategies use predefined rules to select stocks or construct portfolios. Depending on the strategy, models can…