Quant Active Fund Review

Published: June 20, 2021 at 9:35 am

In this article, we review Quant Active Fund, which seems to have caught the attention of young DIY investors.  Why has it caught the attention of investors? Returns! It is always returns! And in particular the last one year return, without any regard to the fund’s history. Quant Active Fund has delivered 96.1% returns in the last year (trailing, at the time of writing).

Our first step will be to trace the history of the fund. This is a lot more fun than analysing returns, although often frustrating due to difficulty getting data. Quant Active Fund has an inception date of April 2001. Since “Quant” is a relatively new name in the mutual fund space, this means they have acquired an AMC.

Quant Capital acquired Escorts Mutual Funds in late 2017, and the change became official in early 2018. After this, Escorts Growth Fund became Quant Growth Fund. Then, with effect from Oct 2018, Quant Growth Fund became Quant Active Fund.

Quant Growth fund was a fully invested (80%-100%) growth equity scheme benchmarked to the Nifty. This changed to Quant Active Fund, a multi-cap fund that can freely invest across market cap benchmarked to the Nifty 500.

Then SEBI changed the asset allocation of multicap funds and then was forced to introduce a new category called flexi-cap to correct this mistake. So from 1st Jan 2021 conformed with the new multicap cap rules. It is now benchmarked to the Nifty500 Multicap 50:25:25 Index. It can now invest 25% to 50% of its assets in large cap, 25-50% in mid cap and 25-50% in small cap stocks separately (min 25% in each cap).


You can see why those with an incurable shiny object syndrome are excited about this fund.Quant Active Fund vs Nifty 500 TRI and Nifty 500 Multicap 50-25-25 TRI since Jan 2019

Quant Active Fund vs Nifty 500 TRI and Nifty 500 Multicap 50-25-25 TRI since Jan 2019The reason for this outperformance is possibly due to an increase in small cap exposure after the March 2020 exposure.

Quant Active Fund Market Cap Allocation History
Quant Active Fund Market Cap Allocation History

Given this, it is surprising why the fund did not orient itself as a flexi-cap fund with the full freedom to change the market cap. Instead, it chose to be a multicap fund with min 25% exposure to all three capitalization segments. In any case, interested readers must appreciate that the fund has barely any history to analyse returns or risk.

The fund has not made any asset allocation calls (increase in bond holdings) in the last couple of years (it can hold up to 35% in bonds).

Asset allocation history of Quant Active Fund
Asset allocation history of Quant Active Fund

The fund had an atrociously high expense ratio for the direct plan until July of last year, when the AUM was just 16 Crores.

Expense Ratio history of Quant Active Fund
Expense Ratio history of Quant Active Fund

After that, the AUM has increased by leaps and bounds. According to AMFI, as of Jan-March 2021 quarter, about 41% of the fund’s AUM is in the direct plan. Before the expense ratio drop in direct plans and possibly a rejuvenated marketing campaign among distributors, the direct plan AUM share was only 24% in April-June 2020 quarter.

The regular plan AUM increased by about 16 times from April-June 2020 to Jan-March 2021 quarters (1506% increase), while the direct plan AUm increased by 35.5 times (3448% increase).

Much of this AUM increase is due to inflows and not returns, as seen from the spike in the red line below. This is the change in AUM minus the change in NAV. Notice that the red line was hovering about zero up to June 2020.

NAV AUM and Change in AUM minus change in NAV of Quant Active Fund
NAV AUM and Change in AUM minus change in NAV of Quant Active Fund

In summary, Quant Active Fund does not have any investor history to analyze past performance. Much of its AUM has come in the last few months, inspired by recent past performance – what we would like to call immature AUM. We strongly urge investors to avoid Quant Active Fund. We must not get carried away by last year’s returns and dig deeper into the fund’s past.

Do share if you found this useful

We now publish both equity fund and debt fund (+ hybrid fund) screeners each month!
Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video!  More than 415 investors and advisors use this!
Unlock the secrets of successful financial advisors and entrepreneurs with our new course!
My new book for kids: “Chinchu gets a superpower!” is now available!
Both boy and girl version covers of Chinchu gets a superpower
Both boy and girl version covers of Chinchu gets a superpower.
Most investor problems can be traced to a lack of informed decision making. We have all made bad decisions and money mistakes when we started earning and spent years undoing these mistakes. Why should our children go through the same pain? What is this book about? As parents, if we had to groom one ability in our children that is key not only to money management and investing but for any aspect of life, what would it be? My answer: Sound Decision Making. So in this book, we meet Chinchu, who is about to turn 10. What he wants for his birthday and how his parent’s plan for it and teach him several key ideas of decision making and money management is the narrative. What readers say!
Feedback from a young reader after reading Chinchu gets a Superpower (small version)
Feedback from a young reader after reading Chinchu gets a Superpower!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.
Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Did you know? We have more than 1000+ videos on YouTube to explore! Join our YouTube Community!

Join our courses in exclusive Facebook Groups!

  • 550+ members are now part of our new course: How to get people to pay for your skills! (watch 1st lecture for free). Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show how to achieve by showcasing your skills and building a community that trusts you and pays you!
  • Goal-based portfolio management! Join 2220+ members and get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free!  One-time payment of Rs. 3000 only. No recurring fees! Life-long access to videos (10+ hours content)  in an exclusive Facebook Group! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.

Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About the Author Pattabiraman editor freefincalM. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. since Aug 2006. Connect with him via Twitter or Linkedin Pattabiraman has co-authored two print-books, You can be rich too with goal-based investing (CNBC TV18) and Gamechanger and seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice. He conducts free money management sessions for corporates and associations based on money management. Previous engagements include World Bank, RBI, BHEL, Asian Paints, Cognizant, Madras Atomic Power Station, Honeywell, Tamil Nadu Investors Association, IIST Alumni Association. For speaking engagements, write to pattu [at] freefincal [dot] com
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than one million readers a year (2.5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
Our publications

You Can Be Rich Too with Goal-Based Investing

You can be rich too with goal based investingPublished by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.
Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want Gamechanger: Forget Start-ups, Join Corporate and Still Live the Rich Life you wantThis book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.

Your Ultimate Guide to Travel

Travel-Training-Kit-Cover-new This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)
Free android apps