Name: - Quantum Long Term Equity Fund -Growth
Type: Open-ended equity Fund
Fund Manager: Mr. I.V. Subramaniam
Inception Date: February 25, 2006
Quantum Mutual Fund is one of its kinds in the industry with unique direct-to-investor approach. Its direct approach means that there are no intermediaries involved in selling of the fund and thus investor can avoid financial distributors and save on commission and other distribution expenses. As a result larger proportion of the investor's money is available for investing which may enhance the returns.
The AMC ventured into the asset management space six months back with the launch of Quantum Long Term Equity Fund. It is an open ended growth scheme whose investment objective is to achieve long-term capital appreciation by investing primarily in shares of large and mid-cap companies that will typically be included in the BSE 200 and are in a position to benefit from the anticipated growth and development of the Indian economy and its markets.
The scheme has just now completed six months of operation and has grown at a CAGR of 12.3%. It has predominantly witnessed volatile market since its launch and thus took some months deploy the funds as a result it was protected from the sharp market gyrations witnessed in recent past and could perform better compared to the peers. Though it is too early to compare the performance of the scheme with its peers but the scheme has made good beginning and has managed to deliver market linked returns so far except 3 months period. The scheme began with a corpus of Rs 11.25 crore and has now grown to Rs 22.25 crore as on August end.
The scheme is mandated to invest 65-99% of its net assets in equity and equity related instruments, 1%-35% in money market instruments, 0% -3% in unlisted equity and equity related securities, 0%-5% in units of liquid schemes of the Fund or of other mutual funds. As on August 2006, the scheme has allocated 82% of its assets in equities, 6.3% in debt and rest in cash and equivalent. Average equity allocation since its inception has been at 61.6% of assets under management of the scheme and is not yet fully invested.
Its equity portfolio includes 28 stocks as on August 2006 with Bajaj Auto in top place. Top 10 holdings account for 37.39% of the equity portfolio and exposure to any single stock is restricted to less than 6%. Other top holdings are SBI, ONGC, Ranbaxy Laboratories and Infosys. This month it made fresh exposure to the stock of Raymond Ltd. Oil& Gas, Bank and IT are its top sectoral picks and account for less than half of the equity portfolio. Over a period of six months it has further hiked exposure in Banking, Oil & Gas and Auto sector while marginally trimmed in Power Generation & Equipment sector. The scheme follows value investing with investments across market captilisation. Such strategy focuses on undervalued stocks and may take little longer to return.
Minimum investment required to enter the scheme is Rs 5000 and offers both dividend and growth options. The scheme charges no entry load however it levies high load charges for early withdrawals in order to encourage long term investing. For instance it charges an entry load of 4% if redeemed within 6 months of allotment, 3% after 6 months but within 12 months of allotment-3%, 2% after 12 months but within 18 months of allotment- 2%, 1% after 18 months but within 24 months of allotment- 1%, and nil after 24 months of allotment. The scheme is benchmarked against BSE Sensex. Expense Ratio of the scheme as on July 31, 06 is 2.5% and is higher than the category average of 2.21%.
The scheme has given reasonable performance so far and investors are advised to retain their investments in the scheme in order to reap the true potential of equities in longer term.
