Quant small-cap fund tops performance charts with 93.78% returns in 2021. The lesser-known mutual fund has been a top runner for two consecutive years, with a 76% return in 2020.
What is the reason behind Quant Small Cap Fund topping performance charts?
While the reason behind the overnight success of Quant Small Cap Fund is still unclear, it has projected incredibly high portfolio turnover ratios.
The Quant Small Cap, Quant Active, and Quant Tax Saver have churned ratios of 145%, 211%, and 283%, respectively.
The ratios represent a scheme’s portfolio. The turnover ratios of 2021 depict a percentage of the scheme’s portfolio changed in the past year.
MD & CEO Sandeep Tandon said, “Using VLRT framework, we are able to manage our funds dynamically. Our portfolios always adapt and reflect the changing market conditions, investor sentiments and act upon any in global macros. By managing our portfolio dynamically, we are also able to better manage the risk profiling of our schemes, thus, endeavour to deliver superior risk-adjusted returns. Thus, our high churning is nothing but a representation of our portfolio rebalancing strategy based on a risk-on/risk-off environment.”
Nevertheless, schemes with different mandates have worked with the same strategy. However, each plan’s high turnover ratio and high standard deviation could throw some light on a momentum-driven model.
In May 2021, Quant Mutual Fund told Mint, “We give 2/3rd weightage to liquidity analytics and risk appetite (risk-on or risk-off) and 1/3rd to valuations. Our portfolios have a high turnover ratio for this reason but it is also the reason for our high returns.”
Quant Small Cap Fund beats everyone for two years in a row
With a 93.78% return in 2021, Quant Small Cap Fund, Quant Infrastructure Fund, Quant Active Fund (a multicap scheme), and Quant Tax Plan topped the performance charts.
Quant Mutual Fund’s seven out of fourteen schemes also excelled their respective categories in the past year.
Nevertheless, Quant Small Cap Fund had beaten everyone for two in a row with an astonishing 76% return in 2020.
The Quant Small Cap Fund schemes include:
Tax Saver Plan (ELSS)
Value Research CEO Dhirendra Kumar said, “Quant MF uses a host of data points, including macroeconomic ones to make its buy and sell decisions. Their model is proprietary and hence cannot be fully understood. It is characterized by a high turnover. However, its performance has held up over the past two years even as its size has grown exponentially larger and it tops the charts in numerous categories. Investors who are willing to go for this sort of trading-driven model would find a scheme like Quant MF more tax-efficient than creating their own algorithms and personally conducting trades.”
Quant Capital was previously a part of the Reliance Securities owned by Anil Ambani. Now headed by Sandeep Tandon, the AUM of the fund house has skyrocketed since the acquisition.
The funds in Oct-Dec 2019 were ₹239 crores, in Oct-Dec 2020 ₹453 crores, and a straight jump to ₹4,630 crores in 2021 Oct-Dec.
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