Is Quant Small Cap mutual Fund safe for 30 years?
Greetings,
All mutual funds are regulated by SEBI. So, it’s unlikely that someone will run away with your money. But there’s market-linked risk that you cannot avoid. Every fund goes through ups and downs and those who muster the courage to stay invested earn sizable gains. So, the same applies to Quant Small Cap as well.
Besides, if you find a fund underperforming consistently in the future, you can always change it. So, what is important is to keep chaking a fund’s performance in 6 months or 1 year.
In that context, let’s review Quant Small Cap’s performance to gain more insights.
Quant Small Cap is in a league of its own. Its 3-year absolute returns are around 300%. The 2nd best is Nippon India Small Cap with 214% return in the same period.
No wonder Quant Small Cap’s popularity is off the roof. Let’s check what has worked in its favor.
The Background
The fund has a history of over 26 years. But as a small-cap fund, it has operated for just around 5 years. Prior to that, it was Quant Income Bond, a debt fund. In fact, the fund was started by Escorts Mutual Fund. It was later renamed after Quant Capital acquired Escorts Mutual Fund
The Meteoric Rise
From just Rs 2 crore in 2019, the fund’s AUM jumped to Rs 4,100 crore in just 4 years, all thanks to its handsome returns
A key reason for its success is its investment strategy. Stocks in this fund are selected based on Quant Fund’s proprietary VLRT model. The model evaluates stocks on 4 factors: valuation, liquidity, risk, and timing. This sets it apart from other funds in the category. Check details ๐
High Portfolio Churn
Most funds don’t buy and sell stocks too often. Quant Small Cap works differently. It buys and sells stocks more often than its peers. Even some of its top holdings go out of the portfolio in a couple of months
Concentrated Bets
On the face of it, the fund’s portfolio looks diversified with around 70 stocks. But there is a sizable concentration in the top holdings. For e.g., the top 10 stocks accounted for more than 50% in 3 of the last 5 years
High Volatility
The fund's exceptional returns are accompanied by higher volatility. In comparison to the category, the fund is almost twice as volatile.
Key Points To Note
The fund showcases outstanding performance. But it has a relatively short track record. It’s yet to prove its metal in various market conditions. Consider these insights to determine if this fund is suitable for you
Hope it helps
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This for information. Mutual funds are subject to market risks. Read the documents carefully before investing
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