Why Quant Investing Has A Huge Potential In India—Prabhudas Lilladher's Siddharth Vora Explains

India has huge potential to manage assets more systematically using quantitative methods, according to Prabhudas Lilladher's Siddharth Vora. That is because only about 0.5% of assets in India are managed quantitatively, he said. 

Quantitative investing uses algorithms to use data and a scientific approach to drive investment decisions, Vora, head of quant investment strategies and fund manager-PMS at Prabhudas Lilladher, told BQ Prime.

In the quantitative format of managing money, Vora said the levels of conviction, clarity, and reliability are slightly higher because fund managers not only able to go by intuition but are also able to test this out through market cycles. "The power that quant gives is converting thoughts into ideas, testing the hypothesis, and turning it into a strategy."

"When we talk about quant, we are not concerned with the source of risk," he said. "We are concerned with the fact that there is a risk that we can detect. And if we can detect the risk in numbers, we can act on it."

Vora leads Prabhudas Lilladher's AQUA—adaptive, quantitative, unbiased, and alpha—equity portfolio management service strategy.

"We are staying clear of AI. We want to blend real intelligence with the help of machines rather than trust artificial intelligence," Vora said on the sidelines of an event in Mumbai.

Launched in June 2023, the AQUA generated 15% returns since inception as against a 6.61% rise in the TRI BSE 500, the fund house said.

"Our alpha has been close to 8.5%, and now as we move into September, the alpha has been generated in each of those shorter timeframes as well," Vora said. "More than 75% to 80% of stocks have outperformed the benchmark, rather than a few stocks leading to big gains. The granular portfolio is doing well."

Watch the full conversation here: