Performance slump halts Quant MF's dream run, AUM growth lags in Q3

Fund house posts sombre growth for the first time in 5 years

Quant Mutual Fund (MF), the fastest-growing major fund house, has registered a decline in its quarterly average assets under management (QAAUM) for the first time since June 2020, amid market corrections and a slump in equity fund performance.

 

The fund house managed Rs 96,697 crore on an average in the quarter ending December 2024, a 0.4 per cent decline from the previous quarter. This is the first time in at least the last five years that its AUM growth was slower than that of the industry.

 

The industry QAAUM went up 3.6 per cent quarter-on-quarter (Q-o-Q) to Rs 68.6 trillion in the December quarter, according to data from the Association of Mutual Funds in India (Amfi).

 

However, Quant MF is still the fastest growing large fund house on a year-on-year basis. Compared to the December 2023 AUM of Rs 40,675 crore, the December 2024 quarterly AUM is up 138 per cent.

 

The AUM degrowth coincides with a slump in performance. Its largest scheme Quant Smallcap Fund has underperformed the BSE 250 Smallcap TRI in the previous three quarters. In the three-month period ending December 2024, the scheme's net asset value (NAV) declined nearly 8 per cent compared to a 5 per cent fall in the index, Value Research data revealed.

 

Most other schemes have also underperformed in recent months.

 

For the past several months, Quant MF schemes have the highest allocation in Reliance Industries, which has declined sharply in recent months.

 

However, most of the schemes remain among the top performers in the 3-year, 5-year and 10-year timeframes.

 

"Performance should be judged based on the risk adjusted returns and not on absolute returns. Our portfolio from July 2024 is constructed for a risk-off phase in the market. Also, our focus is on generating superior risk adjusted returns and not growing the AUM," said Sandeep Tandon, founder and CIO at quant AMC.

 

Underperformance in equity schemes hurts AUM growth on two accounts. While fresh inflows take a hit, the mark-to-market gains are also lower compared to peers.

 

The fund house added 0.3 million investment accounts in the December quarter compared to 0.76 million in the July-September period.

In June 2024, the fund house was hit by front-running allegations with the regulator carrying out raids in its Mumbai office. However, there has been no update on the investigation since then.

 

The analytical fund house, which uses quantitative models to manage funds, has grown multi-folds in the post-Covid period on the back of strong performance.

 

In the latest note, Quant MF called upon investors to judge MF scheme performances through a mix of metrics rather than focusing on point-to-point returns.

 

"Investors should focus on other performance metrics and factors such as risk-adjusted returns and investment strategy when evaluating the quality of a portfolio. Ratios such as sharpe ratio, sortino ratio, Jensen's Alpha, upside and downside deviation, and upside capture and downside capture ratios provide a more comprehensive assessment of risk adjusted performance by incorporating both risk and return metrics," it added.