Mutual Fund Weekly Analysis: Quant Tax Plan
Divya Grover
Aug 10, 2023 / Reading Time: Approx. 10 mins
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Quant Tax Plan is an actively managed Tax Saving Mutual Fund (ELSS) that has gained traction by registering stellar performance in the last few years to reward investors with extraordinary risk-adjusted returns.
What is the growth of Rs 10,000 invested in Quant Tax Plan five years ago?
Quant Tax Plan, the erstwhile Escorts Tax Plan, was launched in March 2000 by Escorts Mutual Fund. The AMC was later acquired by the Quant Group in 2018, and the scheme was renamed as Quant Tax Plan. Notably, Quant Tax Plan witnessed significant underperformance between 2017-2019. Nonetheless, the fund registered a turnaround phase in recent years and handsomely rewarded its investors. Quant Tax Plan follows an active investment approach whereby it constantly hunts for attractive opportunities, which has helped it to generate remarkable alpha in recent years and handsomely rewarded its investors. Consequently, its AUM has grown from just Rs 327 crore as of July 2021 to Rs 4,434 crore as of July 2023. The fund’s relatively small corpus gives it the advantage of easy liquidation and the ability to quickly shift allocation in line with dynamic market conditions. In the last five years, Quant Tax Plan has registered growth at a CAGR of 25.2%, compared to a growth of 13% in its benchmark Nifty 500 – TRI. An investment of Rs 10,000 in Quant Tax Plan five years back would have now tripled to Rs 30,580 against a valuation of Rs 18,323 in its benchmark index.
Past performance is not an indicator of future returns
Data as of August 09, 2023
(Source: ACE MF)
How has Quant Tax Plan performed in the past?
The securities quoted are for illustration only and are not recommendatory.
Returns are point to point and in %, calculated using the Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised.
Data as of August 09, 2023
(Source: ACE MF)
Please note, this table only represents the best-performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.
Quant Tax Plan has recorded extraordinary performance in the last few years. In the last 3-year period, Quant Tax Plan has generated a lead of 14 percentage points in CAGR over the benchmark Nifty 500 - TRI, which is unmatched by any of the schemes in the ELSS category. With the recent superior performance, Quant Tax Plan tops the returns chart by a wide margin across most time frames.
Due to its agile investment strategy, the volatility registered by the fund is higher than the benchmark and most of its peers. Nonetheless, the remarkable returns generated by the fund have helped it score high on risk-reward parameters. The Sharpe ratio of the fund, as denoted by its risk-adjusted returns, is currently one of the highest in the ELSS category.
[Read: 3 Best ELSS to Invest in 2023 - Top Performing Tax Saving Mutual Funds in India]
What is the investment strategy of Quant Tax Plan?
Categorised under ELSS, Quant Tax Plan has the mandate to invest at least 80% of its assets in equity and equity-related instruments across market segments. Accordingly, it aims to hold a well-diversified portfolio that is market cap and sector agnostic, and remains fully invested in equities.
Quant Tax Plan selects stocks by analysing them on its proprietary VLRT framework, viz. Valuations, Liquidity, Risk, and Timing. Here are the key features of the framework:
Valuation Analytics: Knowing the difference between price and value
Liquidity Analytics: Understanding the flow of money across asset classes
Risk Appetite Analytics: Perceiving what drives market participants to certain actions and reactions
Time: Being aware of the cycles that govern how the other three dimensions interact
This framework enables the scheme to understand the various investment trends, thereby allowing it to select high-growth potential stocks. Quant Tax Plan follows an aggressive investment approach wherein it constantly looks for opportunities to generate high alpha. In other words, the fund holds many of its stocks with a short-term view, and as a result, the fund has recorded a high portfolio turnover of around 80-160% in the last one year.
What are the top portfolio holdings in Quant Tax Plan?
Holding in (%) as of July 31, 2023
(Source: ACE MF)
Quant Tax Plan usually holds 40-50 stocks in its portfolio. As of July 31, 2023, Quant Tax Plan held 41 stocks in the portfolio consisting mainly of large-cap stocks. It also held significant exposure of around 30% in mid-cap and small-cap stocks. The top 10 stocks accounted for 58.6% of its assets and included names like HDFC Bank, Reliance Industries, NTPC, DLF, and SBI.
In the last two years, Quant Tax Plan benefitted the most from its holdings in L&T, SBI, Linde India, NTPC, IRB Infrastructure Developers, Dr Reddy's Laboratories, Tata Consumer Products, and Bosch, among others. Meanwhile, it booked profit in VRL Logistics, Bharti Airtel, Aegis Logistics, and ITC.
In terms of sectors, Quant Tax Plan has higher exposure to Banking & Finance that forms nearly one-fourth of its assets. Pharma, Petroleum, Construction, Metals, and Power are the other core sectors in the fund's portfolio, having allocation in the range of 6-10%. It also holds diversification to Infotech, Engineering, Cement, and Consumption, among others.
Is Quant Tax Plan suitable for my investment goals and risk tolerance?
Quant Tax Plan has recorded stellar performance in recent years, while its returns in the past have been satisfactory. The fund stood strong during the 2020 market crash, wherein it outpaced the benchmark and many of its peers. Moreover, the fund topped the category returns in the ensuing bull phase, thereby generating significant alpha for its investors. Quant Tax Plan is quick in its approach to shift allocation between market caps and sectors depending on the market conditions.
Though the volatility registered by Quant Tax Plan is on the higher side, it has generated a higher premium for the level of risk taken. The active investment strategy of identifying multi-bagger stocks has resulted in superior returns for investors in Quant Tax Plan.
The aggressive investment strategy and significant exposure to stocks in the lower market cap makes Quant Tax Plan suitable only for investors with a very high risk appetite and an investment horizon of at least 5 years.
Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.
Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.
DISCLOSURE AS PER SECURITIES AND EXCHANGE BOARD OF INDIA (RESEARCH ANALYSTS) REGULATIONS, 2014
About the Company including business activity
Quantum Information Services Private Limited (QIS) was incorporated on December 19, 1989.
QIS was promoted by Mr Ajit Dayal with an objective of providing value-based information/views on news related to equity markets, the economy in general, sector analysis, budget review and various personal products and investments options available to the Public. It was the first company to start equity research on an institutional level.
'PersonalFN' is a service brand of QIS and was started in the year 1999. In 1999, the Company registered the Domain name www.personalfn.com for providing information on mutual funds and personal financial planning, financial markets in general, etc. and services related to financial planning and research in various financial instruments including mutual funds, insurance and fixed income products to customers. It offers asset allocation and researched investment recommendations through its financial planning services.
Quantum Information Services Private Limited (QIS) is registered as Investment Adviser under SEBI (Investment Adviser) Regulations, 2013 and having Registration No.: INA000000680. In terms of the second proviso to Regulation 3 (1) of SEBI (Research Analysts) Regulations, 2014 the Company is not required to obtain Certificate of registration from SEBI.
Disciplinary history
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Details of associates
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Money Simplified Services Private Limited;
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PersonalFN Insurance Services India Private Limited;
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Equitymaster Agora Research Private Limited;
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Common Sense Living Private Limited;
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Quantum Advisors Private Limited;
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Quantum Asset Management Company Private Limited;
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HelpYourNGO.com India Private Limited;
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HelpYourNGO Foundation;
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Natural Streets for Performing Arts Foundation;
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Primary Real Estate Advisors Private Limited;
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HYNGO India Private Limited;
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Suresh Lulla;
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I V Subramaniam.
Disclosure with regard to ownership and material conflicts of interest
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‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;
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Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;
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Neither QIS, it's Associates, Research Analyst or his/her relative have actual/beneficial ownership of one per cent or more securities of the subject Company, at the end of the month immediately preceding the date of publication of the research report;
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Neither QIS, it's Associates, Research Analyst or his/her relative has any other material conflict of interest at the time of publication of the research report except that QIS (PersonalFN) is, as per SEBI (Mutual Funds) Regulations 1996, an associate / group Company of Quantum Asset Management Company Private Limited and Trustees and Sponsor of Quantum Mutual Fund (QMF) and to that extent there may be conflict of interest while recommending any schemes of QMF. However, any such recommendation or reference made is based on the standard evaluation and selection process, which applies uniformly for all Mutual Fund Schemes. The payment of commission (upfront / annualized & trail), if any, for any Schemes by QMF to QIS (PersonalFN) is also at arm's length and as per prevailing market practices.
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Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;
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Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;
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Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;
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Neither QIS nor it's Associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months.
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General disclosure
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The Research Analyst has not served as an officer, director or employee of the subject Company.
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QIS or the Research Analyst has not been engaged in market making activity for the subject Company.
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