Quant Multi Asset Fund: Following a Nimble Approach to Invest Across Asset Classes

Quant Multi Asset Fund is a well-performing Multi Asset Allocation Fund that follows a nimble investment approach to allocate assets based on market conditions and has exhibited commendable performance in recent years.

Incepted in March 2001, Quant Multi Asset Fund was initially structured as a debt-oriented fund. In 2018, it transitioned to a fund focusing on multi asset investment after the change in the AMC sponsorship from Escorts to Quant Group. It now has the mandate to follow a dynamic portfolio management strategy, diversifying into equity, debt, and commodity (gold and silver) assets by allocating a minimum of 10% in each asset class. The fund also allocates some assets in REITs & InvITs and Derivatives.

Quant Multi Asset Fund follows an adaptive asset allocation strategy to benefit from dynamic market conditions. For instance, if the valuations in the equity market turn expensive, it will trim its equity exposure while simultaneously increasing exposure to other asset classes such as debt, gold, REITs & InvITs, etc. While the past performance of Quant Multi Asset Fund prior to 2018 is not directly comparable due to change in its investment strategy, the fund has performed well under its current mandate, outpacing the CRISIL index and its peers by an exceptional margin. As a result, the fund attracted investors' attention and its corpus has nearly tripled to Rs 2,605 crore as of July 2024.

Its strategy of identifying momentum driven stocks in the equity segment along with agile management of the portfolio across asset classes has enabled it to reward investors with superior gains. In the last five years, Quant Multi Asset Fund's NAV grew at a CAGR of 29.8% compared to a growth of 16.3% in the CRISIL Hybrid 35+65 Aggressive index. An investment of Rs 10,000 in Quant Multi Asset Fund five years back would have now appreciated to 36,933 compared to a valuation of Rs 21,290 in the index.

Quant Multi Asset Fund has registered superior growth across most time frames. In the last 1-year, 2-year and 3-year periods, the fund generated a remarkable lead over the category average of around 6 percentage points on a rolling returns basis and also significantly outperformed the CRISIL Hybrid 35-65 Aggressive index. Over the longer time frames of 5 years and 7 years, Quant Multi Asset Fund tops the returns chart with a lead of 7-13 percentage points over the index and 6-10 percentage points over the category average.

The volatility (standard deviation) registered by Quant Multi Asset Fund at 14.11% is the highest in the category and much higher than the benchmark's 9.48% and the category average of 8.91%. However, the remarkable returns in recent years has enabled it to reward its investors handsomely by generating superior risk-adjusted returns as denoted by its Sharpe ratio.

What is the investment strategy of Quant Multi Asset Fund?

Being categorised as a Multi Asset Allocation Fund, Quant Multi Asset Fund is mandated to invest a minimum of 10% of its assets in three different asset classes. Accordingly, the fund focuses on dynamic management of the portfolio across equity, debt, and gold to navigate the tides of volatility with an aim to offer satisfactory risk-adjusted returns.

The scheme follows the fund house's proprietary VLRT framework viz. Valuations, Liquidity, Risk, and Timing to determine allocation into each of the three asset classes. 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

The fund holds many of its stocks with a short-term view, and as a result, Quant Multi Asset Fund usually recorded a high turnover of 200-350% in the past. Its debt allocation in high credit quality and liquid papers, while it has also invested in Gold and Silver ETFs and REITs & InvITs for diversification.

As of July 31, 2024, Quant Multi Asset Fund allocated 40.6% of its assets in equities, 10.4% in Derivatives - Futures, 10.4% in Gold and Silver ETFs, 5.9% in REITs & InvITs, 10% in debt instruments, and the balance in cash. QMAF invests in a compact portfolio of about 10-20 stocks. It currently holds higher exposure to large-cap names such as ITC, LIC of India, Reliance Industries, JIO Financial Services, and Tata Power. The top 5 stocks account for 38% of its assets. It also currently holds significant exposure to derivatives for hedging purpose.

In the last two years, Quant Multi Asset Fund benefitted the most from its holdings in Reliance Industries, LIC of India, JIO Financial Services, and Tata Power Company that have risen significantly value since the time the fund added them in its portfolio. Moreover, it booked profit in SAIL, HDFC Bank, Hindalco Industries, Bikaji Foods International, GAIL (India), Jindal Steel & Power, Orchid Pharma, Adani Power, and Britannia Industries.

Sector-wise, Quant Multi Asset Fund carries substantial allocation to Finance and Consumption that collectively form 35.8% of its assets. It also diversification to Petroleum, Power, Engineering, and Pharma. Its debt allocation comprises exposure to high quality treasury bills and government securities currently carrying average maturity of 0.6 years.

Is Quant Multi Asset Fund suitable for my investment goals and risk tolerance?

Quant Multi Asset Fund is quick in its approach to shift allocation across market caps, sectors, and asset classes, depending on the market dynamics and outlook. Accordingly, its turnover ratio is higher at around 350%. This strategy has worked in the fund's favour giving it the opportunity to generate high alpha. Notably, Quant Multi Asset Fund struggled to limit the downside risk during the 2020 market crash but showed a noteworthy recovery in the ongoing bull phase. Thus, the fund has the potential to do well over complete market cycles.

Due to the dynamic investment strategy and frequent shuffling of the portfolio holdings, the volatility registered by Quant Multi Asset Fund is relatively higher. Nonetheless, it has compensated its investors well by generating higher risk-adjusted returns.

Quant Multi Asset Fund is suitable for investors looking for an agile scheme in the Multi Asset Fund category with an investment horizon of at least 3-5 years.

Watch this video to find out the best Multi Asset Funds of 2024:

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. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

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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

There are no outstanding litigations against the Company, its subsidiaries and its Directors.

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Details of associates

• Group Companies including:

  1. Money Simplified Services Private Limited;

  2. PersonalFN Insurance Services India Private Limited;

  3. Equitymaster Agora Research Private Limited;

  4. Common Sense Living Private Limited;

  5. Quantum Advisors Private Limited;

  6. Quantum Asset Management Company Private Limited;

  7. HelpYourNGO.com India Private Limited;

  8. HelpYourNGO Foundation;

  9. Natural Streets for Performing Arts Foundation;

  10. Primary Real Estate Advisors Private Limited;

  11. HYNGO India Private Limited;

• Directors of the Company - Suresh Lulla; I V Subramaniam, Murali Ananthan Krishnan and Rafiq Dossani

1. ‘subject company’ is a scheme on which a buy/sell/hold view or target price is given/changed in this Research Report;

2. Neither QIS, it's Associates, Research Analyst or his/her relative have any financial interest in the subject Company;

3. 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;

4. 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.

1. Neither QIS nor it's Associates have received any compensation from the subject Company in the past twelve months;

2. Neither QIS nor it's Associates have managed or co-managed public offering of securities for the subject Company;

3. Neither QIS nor it's Associates have received any compensation for investment banking or merchant banking or brokerage services from the subject Company;

4. 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.

5. Neither QIS nor it's Associates have received any compensation or other benefits from the subject Company or third party in connection with the research report

1. The Research Analyst has not served as an officer, director or employee of the subject Company.

2. QIS or the Research Analyst has not been engaged in market making activity for the subject Company.

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Quantum Information Services Private Limited CIN: U65990MH1989PTC054667 Regd. & Corp. Office: 103, Regent Chambers, 1st Floor, Nariman Point, Mumbai - 400 021

Email:info@personalfn.com Website: www.personalfn.com Tel.: 022 61361200 Fax.: 022 61361222 SEBI-registered Investment Adviser. Registration No. INA000000680, SEBI (Investment Advisers) Regulation, 2013 & BASL Membership Id: 1488

Investment in securities market are subject to market risks, read all scheme related documents carefully.