Quant Active Fund: Long-term outperformance via active portfolio churn

Quant Active Fund was launched in April 2001 and has featured in the top 30 percentile of the multi-cap funds category of CRISIL Mutual Fund Ranking (CMFR) for six consecutive quarters through March this year.

The fund is managed by Ankit Pande, Vasav Sahgal, and Sanjeev Sharma. The month-end assets under management of the fund has grown to Rs 2,300 crore in April this year, from Rs 7 crore in May 2019.

The investment objective of the scheme is to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio of large-cap, mid-cap, and small-cap companies.

Trailing returns

The fund has underperformed in the one-year trailing period due to the recent market decline. However, for equity funds, long-term performance of three years and above should be looked at.

Quant Active Fund has outperformed the benchmark (Nifty500 Multicap 50:25:25 Total Returns Index) and its peers (funds ranked under the multi-cap category in March 2022 CMFR) in the past 2-, 3-, 5-, 7-, and 10-year trailing periods. Its peers are underperforming in the longer trailing periods.

An investment of Rs 10,000 in the fund on April 1, 2005 (inception of the benchmark of the fund), would have grown to Rs 1.31 lakh on May 12 this year at an annualised rate of 16.24 per cent, compared with the category and the benchmark, which would have grown to Rs 1.14 lakh (15.27 per cent per annum) and Rs 1.1 lakh (15.04 per cent per annum), respectively.

Systematic investment plan is a disciplined mode of investment offered by mutual funds through which one can invest a certain amount at regular intervals. A monthly investment of Rs 10,000 for the past 10 years in the fund, totalling Rs 12 lakh, would have grown to Rs 35.28 lakh (20.64 per cent annualised returns), compared with Rs 25.09 lakh (14.26 per cent annualised returns) in the benchmark as on May 12.

Portfolio analysis

In the past three years, the fund took exposure across market capitalisations, while maintaining a relatively higher allocation to large-cap stocks. The exposure to large-cap stocks averaged 46.31 per cent, while that to mid-cap and small-cap stock allocations averaged 21.21 per cent and 28.54 per cent, respectively.

The portfolio was diversified across 34 sectors in the past three years. Finance had the highest average allocation of 13.53 per cent, followed by consumer non-durables (11.75 per cent), pharmaceuticals (11.68 per cent), banks (9.53 per cent), and chemicals (5.57 per cent).

The fund took exposure to 252 stocks in the past three years. Of these, Stylam Industries, Neuland Laboratories, Majesco, Linde India, and Fortis Healthcare were the highest contributors to the fund’s performance.