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Why NJ Asset Management Prefers Quant Based Investment Over Traditional Models

Let me start off by asking you what kind of approach that you are looking at with respect to investments and how do you go about selecting your sectors?

Rajiv Shastri: Our approach to investment is what is called Factor based investment or Quant based investment or Rule based investment. But the basic thesis behind is that we peruse past data and we are able to use that data to identify certain desirable characteristics in stocks and rules developed on the basis of identification to identify stocks. Then those stocks should reflect the performance of those desirable characteristics. So, you know, these characteristics are popularly known as factors. Basically there are four that are applicable in India, which are Quality, Value, Momentum and Low volatility. So, we use these factors to identify our stocks and then we invest in the stocks that our models, you know, identify. So, we…

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