he performance of Quantum Long Term Equity Fund (QLTE) is reviewed using resources at VR, MorningStar and lump sum and SIP rolling returns.
QLTE is the flagship fund of Quantum AMC. Its performance has caused concerns to many investors. Being a direct only AMC, the fund receives no support from advisors who are quite eager to criticise it at the drop of a hat. Its strategy of holding cash if it does not find ‘value’ also have been criticised by many.
In this video, I discuss the performance of QLTE along with my impressions/opinions about the AMC. Before you head to the video, some notes:
- QLTE was launched in March 2006. So it is on the verge of completing a decade in operation. I incorrectly mention the age as 8 years in the video. Apologies.
- QLTE has a turnover of 5%. This means that it has hardly changed its portfolio in the last year and has taken a pretty long-term view. Perhaps they are ready to take on short-term underperformance for long-term outperformance. If you an investor, I think this is key information, perhaps enough to wait and watch. I forgot to mention this in the video.
About Quamtum AMC
- On 12th June 2014, Jimmy Patel sent a Newsletter to investors (like me) titled, You are important to us! In he discussed quantum’s plans to achieve a net worth of 50 Cr (before early 2017) in order to continue operations. After tabulating net worth growth (see graph below), he wrote:
“With this growth pace and abiding by our vision to be the most respected fund house we expect our future profits to help us cross the Rs 50 crore net worth line. Nevertheless, to back us with strong support our sponsors too are focused and determined on the growth of the AMC”.
- The same day, I posted this graph at Facebook Group Asan Ideas for Wealth and said that its profits are unlikely to be enough for it to cross the 50 Cr mark
- Perhaps the sponsors of Quantum senses this and sold a 49.2% stake to Fairfax Financial Holdings. Video of the announcement made on November 9th 2015 is here. This enabled them to attain the sufficient net worth of 50 Cr.
- As mentioned in the video, while I still trust the fund management team of QLTE, I am not too happy with the way QLTE is projecting itself or growing. Its USP of ‘direct to investor’ is no longer as relevant. Much younger funds like those from PPFAS and MOST have a much larger AUM, much of it in direct plans.
- Among its 9 funds, 7 of them hardly have any AUM (dynamic bond is too young to judge). I think it needs a serious image change and needs to proactively reach out to more investors. If it is going to pin its hopes too much on QLTE then its peer performance will have to improve. Even if we assume existing investors would remain loyal to it, it would be difficult to rope in new investors with a 3-star rank.
With all that out of the way, here is the review: