Quant PMS funds are on the rise, as more HNIs choose data-driven strategies to beat benchmarks

Quant PMS funds gain ground as data-driven strategies beat benchmarks

Quantitative and factor-based PMS strategies - driven by data models, momentum cues, and systematic portfolio construction - are steadily outpacing traditional discretionary funds, or those where a fund manager or trustee has the mandate to make investment decisions on behalf of the client.

In the past year alone, quant and factor-based funds have gone from being a novelty to a meaningful cohort in India’s PMS universe. According to PMS AIF World’s October 2025 newsletter, five out of the top 10 newly launched PMS strategies (with less than one year of track record) now use a quant or factor-based model. These include Qode Advisors’ All Weather Growth and Tactical Funds, ArthAlpha Machine Learning Quant PMS and Elever Adviser FactorCore PMS.

The evidence, drawn from the latest PMS AIF disclosures, points to a new phase in how high networth investors are seeking alpha: not from intuition, but from algorithms.

In comparison, PMS reports from late 2023 had virtually no quant-labelled strategies among top launches, underlining how the shift toward systematic investing has accelerated within just 12 to 18 months.

Across the new cohort, quant PMS funds are not only multiplying in number but also in results.

The PMS AIF World's October data shows that quant PMS strategies are generating six-month returns between 10-17 percent, compared with the BSE 500 TRI’s 7.19 percent and the Nifty 50 TRI’s 5.53 percent over the same period.

Meanwhile, several non-quant peers in the same peer group (MoneyGrow and Dynamic Equities Bluechip PMS) have posted flat to negative one-year returns, suggesting that systematic portfolios are navigating volatility better than discretionary funds.

Globally too, quant investing has moved from institutional to mainstream, and the trend in India is mirroring that pattern.

While discretionary multicap and smallcap strategies still dominate total PMS AUM, quant PMS funds - such as those by Qode, ArthAlpha, and Capitalmind - now account for 40-50 percent of all new PMS strategies launched since 2024.

However, the AUM traction is still modest but improving, indicating growing acceptance among HNIs testing these models with small-ticket allocations. Collectively, new quant PMS funds such as Qode Advisors’ All Weather Growth, and Tactical strategies, along with Capitalmind SmartCore, manage around Rs 160 crore in assets - averaging Rs 40 crore per scheme. While still smaller than the Rs 80 crore average for discretionary PMS peers, this represents a sharp rise from the sub-Rs 15 crore levels at launch, underscoring growing HNI acceptance of systematic investing.

As AI-led automation reshapes data analytics in investing, quant and AI-enhanced PMS models are emerging as tools to eliminate behavioural biases and maintain investor discipline.

India’s digital ecosystem - from Aadhaar and UPI to corporate financial databases - provides rich datasets that can be used for predictive factor modelling. Combined with expanding retail participation and higher transparency norms under Sebi’s PMS disclosure guidelines, the groundwork for quant investing at scale is being laid.

Market strategists view this as India’s equivalent of the early 2010s US “quant renaissance,” when factor models like momentum, quality, and low-volatility outperformed discretionary funds for nearly a decade.

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