Ask Morningstar: What makes Quant Mutual Fund such a hit?

By Himanshu Srivastava |  26-05-22 | 
 
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About the Author
Himanshu Srivastava is a Research Analyst with Morningstar. He would like to hear from you, but cannot give financial advice.

What makes the schemes of Quant Mutual Fund do so well? What is their investment philosophy? Do they have a long track record?

Quant Mutual Fund is a relatively new mutual fund company, which came into existence in 2018 when Quant Capital acquired Escorts Mutual Fund.

Our analysts did not cover the schemes of Escorts Mutual Fund, nor have we initiated coverage of Quant Mutual Fund.

So while I cannot comment on their investment style with great detail, I did go through their portfolios and looked at various attributes.

Over the last couple of years, the fund house has caught investors’ attention on the back of strong performance of its schemes. Most of the funds have performed well, not only during the bull phase of 2020 and 2021, but also during the recent market correction. Besides, they have also been able to keep risks under check.

The investment approach is fluid and unconstrained in nature. The investment team is style agnostic, which means that they don’t follow any specific investment style i.e., either growth of value. Neither do they have any bias towards a specific sector.

They tend to ply an opportunistic style of investing which enables them to quickly manoeuvre the portfolio and swiftly shift from one investment opportunity to another. The investment strategy doesn’t have much room for a buy and hold approach, as there is reliance on capitalising from short-term investment opportunities, which is evident from relatively high churn in the portfolio. They freely take overweight or underweight positions depending on their views.

With this approach, the team was able to capture the sector rotations in the market and changing investment landscape, which helped the funds post superior performance.

This is a rather aggressive investment style and a lot depend on the team’s and manager’s execution capabilities. Clearly, the team has been able to execute this strategy in their short stint so far, but calls can go wrong.

It would be prudent to evaluate this investment style and its successful execution over a much longer time frame (say a minimum 5-year period and across market cycles) to check its viability and consistency.

Registered readers can post their queries by accessing the Ask Morningstar tab. Our team will answer SELECT queries relating to mutual funds, portfolio planning and personal finance. While we provide broad guidelines, we suggest you consult a financial adviser before making investment decisions.

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Articles authored by HIMANSHU SRIVASTAVA

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SK Sharma
May 26 2022 07:58 PM
 Are funds from Quant mutual fund safe? Do they follow momentum investing?
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