Skip to main content

Mutual Fund Review: Quantum Long Term Equity

This fund's stock selection is sector agnostic and not limited by market cap levels

If you are looking for a fund which truly adheres to a buy-and-hold strategy, this one fits the bill. With such a small corpus, it would not be surprising to see the fund manager dabble in smaller stocks, churn his portfolio rapidly or take concentrated bets. Contrary to expectation, that is not the case at all. The fund started off as a large-cap offering, changed its complexion and now once again is predominantly in large caps. It is also one of the funds with the least amount of churn. Till date, just 54 stocks have appeared in the fund's portfolio and out of them only eight have been held for five or months or less. What you will find here is a value based, well diversified, liquid portfolio.

 

"We are completely sector agnostic and neither is our criteria on the market cap of the stock," explains Kumar. "We are value investors who go for bottom up stock picking and closely look at the daily average trading volume of the stock. From our universe of companies, we make our pick."

 

The fund house follows a very process driven strategy. Buy and sell limits are set for each of the stocks. Only stocks that fall within the predetermined purchase price are picked up. Once a sell limit is reached, the team re-evaluates the target and if they do not find value in holding on at that price, they exit the stock. This would explain why the fund often has substantial cash allocations during market run ups. It would also explain why in 2008, the cash and debt exposure in any single month never exceeded 5 per cent of the portfolio.

 

The fund's style means that it can lag behind its peers when speculative growth stocks rule the roost. In 2007, the fund lagged behind the category average with a return of just 46 per cent. Its high cash and debt exposure (16%) in the December quarter that year also contributed to that. Moreover, the fund manager refused to shed his IT exposure despite the fact that tech stocks were reeling under the pressure of rupee appreciation. Come 2008, and this very exposure was its saving grace. "We look at the long term fundamentals of the company before we invest in it. Once done, we do not get swayed by market movements," says Kumar.

 

Not only has this fund rewarded its investors over the long term, it is even one of the cheapest ones available in terms of a low expense ratio.

 

Popular posts from this blog

How to Decide your asset allocation with Mutual Funds?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India) How to Decide your asset allocation ? The funds that base their equity allocation on market valuation have given stable returns in the past. Pick these if you are a buy-and-forget investor. Small investors are often victims of greed and fear. When markets are rising, greed makes the small investor increase his exposure to stocks. And when stocks crash to low levels, fear makes him redeem his investments. But there are a few funds that avoid this risk by continuously changing the asset mix of their portfolios. Their allocation to equity is not based on the fund manager's outlook for the market, but on its valuations. Our top pick is the Franklin Templeton Dynamic PE Ratio Fund, a fund of funds that divides its corpus between two schemes from the same fund house-the...

All about "Derivatives"

What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...

Benefits Of Repo Rate & CRR Rate Cut On Consumers

  How Reduction In Repo Rate & CRR Affects Customers Finally  RBI announced slashing of repo rate by 25 basis points (bps ) and cash reserve ratio (CRR) by 25 bps which industry experts believe will fuel the economic growth to some extent. Although experts were expecting higher rate cut this year. This lowering of the rate cuts has taken place for the first time in nine months. Now let's see how reducing the repo rate (defined in economic term as the rate at which RBI lends money to the banks) relates to the following individuals and sectors: Banking:   Lowering of repo rate directly reduces borrowing costs of a bank. Banks in turn reduces interest rates on different types of loans such as home, auto, business etc. Similarly trimming down of CRR allows banks to unlock money for lending to the customers i.e. with 0.25 rate cut banks are estimated to lend more than INR. 17 Crores. Consumers:   Lower repo rate does not necessarily benefit existing loan borrowers but new loan se...

Zero Coupon Bonds or discount bond or deep discount bond

A ZERO-COUPON bond (also called a discount bond or deep discount bond ) is a bond bought at a price lower than its face value with the face value repaid at the time of maturity.   There is no coupon or interim payments, hence the term zero-coupon bond. Investors earn return from the compounded interest all paid at maturity plus the difference between the discounted price of the bond and its par (or redemption) value. In contrast, an investor who has a regular bond receives income from coupon payments, which are usually made semi-annually. The investor also receives the principal or face value of the investment when the bond matures. Zero-coupon bonds may be long or short-term investments.   Long term zero coupon maturity dates typically start at 10 years. The bonds can be held until maturity or sold on secondary bond markets.

NFO Review: Edelweiss Select Midcap Fund

      Edelweiss Mutual Fund has announced the launch of another equity fund after a gap of nearly two years. This fund will be focused on mid cap stocks.   Investment Strategy The primary investment objective of the scheme is to generate long term capital appreciation from a portfolio predominantly comprising of equity and equity related securities of mid cap companies. The scheme may invest upto 100% in equity and equity related securities of companies falling in top 101 to 300 companies by market capitalization. However, it may also invest upto 20% in other listed companies as well as in debt and money market instruments.   Fund Manager Mr. Paul Parampreet and Mr. Nandik Mallik will co-manage the scheme. Mr. Paul Parampreet has done PGDM (IIM – Calcutta) and B.Tech (IIT-Kharagpur). With overall experience of 6 years, he has worked with Edelweiss Securities Ltd. SDG India Pvt. Ltd. ICICI Bank and BG India Pvt. Ltd. Mr. Nandik Malik has done MS-Finance (London Business Schoo...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now