Quant Small Cap Fund: Let's get to know History, Growth, Review, NAV, Tactics and Rolling Returns of Mutual Funds
Quant Small Cap Fund: Let's get to know History, Growth, Review, NAV, Tactics and Rolling Returns of Mutual Funds - NewsWiseStories
Overview of Quant Small Cap Fund:
The Quant Small Cap Fund is an investment fund which mostly that focuses on small-cap companies. The investment strategy of this fund focuses to identify promising opportunities among some known and more lesser-known companies with high growth potential. The fund has a clear goal of delivering attractive returns to its investors.
Table Of Contents:
- Quant Small Cap Fund Growth
- Quant Small Cap Fund NAV
- Rolling Returns of Quant Small Cap Fund
- Quant Small Cap Fund Investment Approach
- Tactics Benefiting Quant Small Cap Fund
- Key Points to Remember
- Conclusion
- FAQs (Frequently Asked Questions)
Quant Small Cap Fund History:
I thought of taking a decision to take a hard look at this fund and try to figure out what makes it perform well. Let's start.
The 26-year history of Quant Small Cap Fund is impressive. However, hear this out before you start looking at its long-term success. This fund has only been around since 2018 in its current avatar. It hasn't even been a small cap fund for five years.
It was a debt fund that was previously known as Quant Income Bond. If you go further back in time, Scott's Mutual Fund started it.
After Quant Capital purchased the Mutual Fund firm, it underwent a name change.
Quant Small Cap Fund Growth:
In this article, we'll be evaluating the four-year period of this Quant small cap fund growth. Quant Small Cap Fund now has an AUM of about 4,688.18 crore as of June 27th 2023. Considering that it falls within the small cap category, this is a respectable size. But what is amazing is how quickly it has expanded. Due to investors pouring money into the fund due to its high continuous return, its AUM increased from just under 2 crore in 2019 to the current 4,000 crore. We started off by talking about the fund's returns. Let's now examine its performance in further depth.
We will contrast the fund's returns with those of the benchmark and its peers in order to evaluate its performance. Let's start with the yearly performance. The fund under-performed the category and benchmark in 2019. But it continuously ranked first in the years that followed. Take notice of the performance.
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In 2020, it produced 42% more than the average for its category. That was roughly 28% in 2021 and about 9% in 2022. This is a massive improvement. What transpired in 2019 and 2020 caused the fund to underperform before dramatically outperforming? For that, we looked at the top 10 holdings of the fund throughout those two years and we could see, the fund placed a lot of bad bets. The fund performed poorly because of the concentration in the top 10 holdings. What, however, changed in 2020? Several stocks did exceptionally well in this area.
Therefore, the fund benefited from the concentration.
Quant Small Cap Fund NAV
the Quant Small Cap Fund NAV as of 30th June 2023 is: ₹170.7499
The CAGR of this fund is below:
1 Year: 41.06%
2 Years: 20.08%
3 Years: 59.42%
4 Years: 38.74%
5 Years: 27.19%
Rolling Returns of Quant Small Cap Fund Direct Growth:
Let's now talk about rolling returns in order to get the full picture, another feature of returns. What are these, though? The rolling return demonstrates the consistency of a fund's performance over time. We look at the fund's three-year rolling returns since becoming a small cap fund in October 2018 for this fund. Currently, the fund's line is above the category as seen in the above graph.
This suggests that its three-year returns have exceeded both the category's and the benchmark's total returns over the same time period.
A significant disparity between the returns of the funds and benchmarks or categories is implied by a large gap. We also look at the fund's top and lowest return performance.
After all, some investments have a tendency to climb quickly and fall quickly. However, the Quant Smallcap Fund also does well using this criterion.
Its rolling returns over the maximum, minimum, and average year outperform those of the benchmark and the category. What do we learn from all this information? In the brief time this fund has existed, the performance has been outstanding.
Quant Small Cap Fund Investment Approach:
Let's now examine what has benefited the fund and investigate its investment approach. We discovered that this fund's exceptional success is the result of three distinct tactics, some of which are dangerous. The returns on the fund can suffer if one of them doesn't work. Before we discuss the factors that have benefited the fund, let's take a closer look at its investment approach. Small cap funds frequently use the bottom sub strategy. Fund managers use this strategy of stock selection to assess a stock's long-term growth potential and fundamentals.
Economic conditions, market cycles, sector performance, etc. aren't given much weight by them. The small cap fund of Quant does not employ this strategy.
It actually has the exact opposite effect. The top-down strategy is used by the fund managers. This focuses on the broad picture, or how the markets and, ultimately, stock prices are influenced by the macroeconomic environment and the general state of the economy.
Quant Mutual Fund doesn't employ a single strategy since it believes that no strategy can succeed in all possible market environments. The investment firm utilises a model to choose equities for each of its funds. It is known as the VLRT Model and is based on a top-down methodology.
VLRT now stands for four variables that the fund house's model uses. The letters such as V, L, R, and T stand for valuation, liquidity, risk, and time, respectively.
Tactics Benefiting Quant Small Cap Fund:
Let's now discuss the three tactics that have benefited this fund.
1st Tactic:
The fund, in comparison to its counterparts, buys and sells stocks more often. The turnover ratio of the fund is among the best metrics to use when analysing portfolio changes.
It displays how frequently the fund adds to and subtracts from its portfolio of stocks. The purchasing and selling are more prevalent when this ratio is larger. A portfolio's whole value has changed in the previous year if the turnover ratio is 100%. In comparison to its peers, the fund has regularly demonstrated an extremely high turnover rate.
This implies that the stock purchases and sales made by the fund managers remain ongoing. The majority of funds rarely buy and sell equities. Different principles apply to Quant Small Cap Fund. The VLRT model is the reason of that. What goes in and what comes out of the portfolio is determined by the model.
2nd Tactic:
Let's now turn to the second tactic. The fund places focused wagers. The data demonstrates that the fund places focused investments. As you can see on your screen, the number of stocks in the portfolio is increasing as we check it. Being a small cap fund, this makes sense. The fund needs to diversify into additional stocks as it grows. However, there isn't a lot of liquidity in this tiny cap area.
A fund manager could occasionally not be able to obtain the number of stocks he desires. Now, if you follow the idea that as the number of stocks in your portfolio rises, the proportion of top stocks in your industry should gradually decline.
Even if the fund invests in additional stocks, in three of the last five years, the allocation to the top 10 equities has remained above 50%. That's quite tightly packed. Most of the time, this concentration exceeds that of the majority of its contemporaries. In fact, the top five sectors' combined share has also lingered between 40% and 60%. Although this is likewise the trend among its competitors, Smallcap Fund has overreached on a few occasions.
To our amazement, we saw that in 2020, only two sectors—chemical and health care—would receive 75% of the fund's allocation. This demonstrates the fund's strong conviction in its sectoral wager. But doing so might be dangerous. The returns from the fund may suffer significantly if such bets fail.
3rd Topic:
Let's now discuss the third and last tactic. The difference between a fund's best and lowest returns is essentially what is meant by volatility. When a fund's stock picks are successful, they outperform their rivals in terms of returns. The returns plunge sharply from their highs when an investment fails. We make use of standard deviation to quantify volatility. The standard deviation of the fund's three-year rolling returns is displayed on the graph. More standard deviation is better volatility.
This fund's record-breaking performance and larger returns have been accompanied by greater volatility. The more the fund is nearly twice as volatile as its counterparts.
Key Points to Remember:
Although the fund's performance is excellent right now, investors should be aware of a few things.
First of all, the fund has only existed for less than five years. We don't yet know how the fund has performed during many market cycles.
Two: Compared to other plans, the fund managers trade stocks significantly more quickly. A higher turnover ratio is the outcome of this. It remains to be seen if this tactic will be successful over the long term.
Three: The fund places targeted wagers on both stocks and industry sectors. Typically risky is a concentrated portfolio. When markets correct, it can experience sharper corrections. As we previously witnessed, the fund experienced this in 2019. The fund has higher volatility than its counterparts, which is the fourth thing we discovered. This implies that the fund's returns could fluctuate dramatically. If you want to invest in it, be ready for similar fluctuations. We trust that these details will aid in your decision on the suitability of this fund for you.Before making an investment, you must conduct your own research.
Conclusion:
After analyzing or reviewing the investment strategy, risk assessment and performance of the Quant Small Cap Fund, we notice that the fund has actually achieved remarkable success in the last years. Small cap funds should only be chosen by investors who are willing to take on more risk in exchange for a higher return.
However, investors should be careful while considering their investment objectives and risk tolerance before making any investment or financial decisions. Do research thoroughly first and and if possible do seek for professional advice to ensure alignment with individual financial goals.
FAQs (Frequently Asked Questions):
What is Quant Small Cap Fund?
Quant Small Cap Fund is a mutual fund focusing in small-cap companies with high growth potential for investment. It has the goal to deliver super attractive returns by leveraging a systematic investment strategy to investors.
What does Quant Small Cap Fund make to differ from other mutual funds?
Quant Small Cap Fund is quite different by specializing in small-cap investments. It targets companies with smaller market capitalization, allowing investors to potentially benefit from the high growth and lesser-known companies.
Do you have performance track record of Quant Small Cap Fund?
Quant Small Cap Fund has demonstrated superb performance, achieving over 300% returns in the last 3 years. However, past performance is not indicative of future returns and investors should consider various other aspects before making investment decisions.
What is the investment strategy of Quant Small Cap Fund Direct Growth?
The fund follows a unique investment strategy, rigorous research, data analysis, and quantitative models to identify small-cap companies with high growth potentials.
What are the risks associated with investing in Quant Small Cap Fund?
Investing in small-cap companies involves higher risks compared to more established and larger companies. Small-cap funds can be more volatile due to their greater price fluctuations. Investors should carefully assess their risk appetite and tolerance and consider the fund's risk management strategies before investing in those.
Who manages the Quant Small Cap Fund?
The fund is managed by experienced professionals who specialize in small-cap investing. It is essential to research and evaluate the fund manager's track record, expertise, and investment approach when considering an investment.
What is the minimum investment requirement for Quant Small Cap Fund?
The minimum investment requirement may vary depending on the fund and the investment platform. For this fund, it is 1000 rupees of SIP minimum.
Can I redeem my investment in Quant Small Cap Fund at any time?
Yes, Mutual funds typically offer liquidity which allows its investors to redeem their investments at any time. However, it is advisable to review the fund's redemption policies, including any applicable exit load or lock-in period, before making investment decisions.
Should I consider investing in Quant Small Cap Fund?
The decision to invest in Quant Small Cap Fund is upon yourself. However, it depends on a number of things such as your investing goals, time horizon, risk tolerance etc and then make investment decisions.
Disclaimer:
Mutual Funds investments are subject to market risks, read all scheme-related documents carefully. Past performance is not an indicator for future returns.
The figures are for representational purposes only and do not offer any guarantees. The figures in amount have been calculated based on historic returns of the Quant Small Cap Fund.
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