Mutual Funds

Quantum Long-Term Equity Fund: Invest

Srividhya Sivakumar | Updated on August 20, 2011


Desperate times do not always call for desperate measures. With the markets revisiting lows each day, investors may be better-off sticking to the known and tested mutual funds schemes.

Quantum Long-Term Equity Fund makes for a good investment bet in these times. The fund has a proven record of weathering volatile markets well. Besides, its ‘buy and hold' strategy, bottom-up stock picking approach and focus on corporate governance and management quality add to its charm in the present market conditions.

Suitability: The fund makes for a good addition to the core portfolio of investors. The fund's investment style — isn't shy of holding cash when valuations are not reasonable — and its ability to contain downsides peg its risk profile lower than most of its peers.

That said, while the fund has managed to handle volatile and declining markets well, its performance during secular bull runs hasn't been as exceptional. A phased approach by way of SIPs may also be considered.

Performance: Quantum Long-Term Equity Fund has managed to comfortably beat its benchmark over one-, three- and five-year periods. Note that the fund benchmarks itself to the BSE 30 Total Returns Index, which factors in dividends and other inflows too into its returns. Its three-year returns of about 15.6 per cent place it ahead of some of the best funds in its category such as HDFC Top 200, DSP BR Top 100 and Fidelity Equity.

The fund's performance during periods of market volatility also merits a special note. In 2008, which was one of the worst years for equities, the fund managed to arrest its NAV slide to 46 per cent, way better than many of its peers. The Sensex had registered a 51 per cent fall that year. The fund has managed to display this strength even during the recent market gyrations. From the November-10 highs till date, the fund's net asset value has fallen by about 16 per cent, comfortably lower than the 20 per cent fall registered by its benchmark.

The fund's performance during market rallies however hasn't been as exceptional. In 2007, for instance, the fund's 45 per cent returns trailed its benchmark as well as a number of peers. Conservative investment strategy with a ‘buy and hold' focus and lower exposure to midcap stocks capped its returns then.

The fund did manage to improve on this front in the rally from March 2009 lows, when it delivered 129 per cent (from March 2009 lows to end of the year), beating its benchmark as well as many peers. The fund's investing style therefore would require investors to keep at least a 3-4 years horizon to reap returns.

Portfolio: The fund's portfolio is typically compact and doesn't see a lot of churn - Maruti Suzuki was the only new addition in the last six months. Its small asset size may have also helped here. Its cash calls have also been rather bold, with the fund maintaining a substantial exposure to debt throughout last year.

Published on August 20, 2011

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