Lotus India Mutual Fund, the only Indian firm to offer quant funds, plans to launch at least four more such funds in 2008 and is exploring models designed around mid-cap and small-cap stocks. Two plans will be based on computer-based models developed by overseas firms, while testing is underway for some in-house versions. Lotus is talking to two foreign banks for quant models as well as a U.S.-based consultant who designs models for hedge funds. Quant funds use computer-based models to crunch vast amounts of historical data using mathematical techniques to evaluate risk and predict future security movements. This is unlike fundamental and technical analysis that are largely subjective.
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