Investing in Quant Small Cap Fund: Is It Worth It?
The Quant Small Cap Fund has emerged as a leading performer among 361 equity funds, impressing investors with its consistent performance since 2020. This fund, managed by Ankit Pande, has demonstrated remarkable resilience, particularly in quarters when the benchmark has been in the red.
Since its inception, the Quant Small Cap Fund has followed a systematic, quantitative model-based strategy, known as the VLRT model. This model evaluates stocks based on multiple factors, including value, liquidity, risk, and technical parameters. The fund manager applies a disciplined, data-driven investment approach focused on identifying fundamentally strong small-cap companies with growth potential.
The fund's portfolio, as of December 2022, consists of 71 stocks, indicating a diversified approach. This diversification extends to sector allocation, with a primary focus on the small-cap segment but some exposure to large-cap and mid-cap stocks for diversification and risk mitigation. The portfolio typically holds sector allocations majorly in Financial Services, Energy, Healthcare, and Consumer sectors.
The Quant Small Cap Fund's assets under management (AUM) have grown almost 35 times in the past three years, from Rs 94 crore in December 2020 to Rs 3,301 crore in February 2023. Despite this growth, the expense ratio remains moderate, reflecting active management.
The fund's investment strategy involves a style-agnostic approach and the selection of businesses based on Quant's proprietary VLRT model. The fund manager, Arvind Pande, frequently churns the portfolio and does not necessarily hold his top bets for a long time.
The fund has shown outstanding stock-picking abilities, but it has a limited track record of outperformance as it started doing well only in 2020. However, it's important to note that before 2020, the Quant Small Cap Fund was an underperformer.
If one had invested Rs 1 lakh in Quant Small Cap Fund in 2020, it would have grown close to 4 times, to Rs 3.6 lakh. The fund's top holdings include ITC, RBL Bank, Punjab National Bank, Jindal Stainless, IRB Infrastructure Developers, Bikaji Foods International, HFCL, The India Cements, Hindustan Copper, and TV18 Broadcast.
However, investing in Quant Small Cap Fund requires a longer investment horizon and the willingness to tolerate higher volatility. The fund has delivered in both rising and falling markets, but its quarterly returns have varied, with both positive and negative performances.
In conclusion, the Quant Small Cap Fund's systematic edge, combined with its growth potential and risk controls, makes it an attractive choice for investors seeking long-term capital appreciation in the small-cap segment.
[1] Source: Quant Fund Management [2] Source: Morningstar India [3] Source: Value Research [4] Source: ET Money
Equity funds like the Quant Small Cap Fund, which focuses on small-business ventures, have gained finance industry attention due to their impressive performance. A disciplined, data-driven investment approach in these funds, such as the one managed by Arvind Pande, involves actively seeking out fundamentally strong small-cap companies for investing purposes. For instance, one might invest in ITC, RBL Bank, or Jindal Stainless through such equity funds.
