This Mutual Fund Has Outperformed Its Category: An Investment of Rs 1,00,000 Turned Rs 6,20,000 In Just 5 Years

With significant Assets Under Management (AUM) of Rs 26,670 crore as of December 2024, the fund has garnered substantial investor trust.

The Quant Small Cap Fund Direct Plan-Growth has emerged as a prominent player in the Small-Cap fund category, attracting investors seeking exposure to high-growth companies. Launched in January 2013, this open-ended equity fund aims to generate long-term capital appreciation by primarily investing in small-cap stocks.

With significant Assets Under Management (AUM) of Rs 26,670 crore as of December 2024, the fund has garnered substantial investor trust. It is benchmarked against the NIFTY Small-Cap 250 Total Return Index (TRI), providing a relevant yardstick for performance evaluation.

Performance Analysis

The Quant Small Cap Fund has delivered impressive returns across various time horizons. While its one-year returns (13.71 per cent) lagged the category average (18.92 per cent), it significantly outperformed over three years (24.97 per cent vs. category average of 21.16 per cent), five years (44.03 per cent vs. 29.33 per cent), seven years (26.56 per cent vs. 17.17 per cent), and ten years (20.47 per cent vs. 18.02 per cent), demonstrating its ability to generate wealth over the long term.

Investment Strategy and Portfolio

The fund employs a disciplined investment approach, focusing on identifying high-growth small-cap companies while maintaining diversification to mitigate risks. It allocates 93.4 per cent of its portfolio to equities, with a strong emphasis on small-caps (65.39 per cent), complemented by exposure to Mid-Cap and Large-Cap stocks.

The fund's portfolio is diversified across sectors, with a significant presence in services (17.35 per cent), healthcare (16.8 per cent), financials (15.6 per cent), energy (12.78 per cent), and consumer staples (6.35 per cent). Top holdings include Reliance Industries Ltd. (8.99 per cent), Jio Financial Services Ltd. (5.89 per cent), Aegis Logistics Ltd. (4.05 per cent), Aditya Birla Fashion and Retail Ltd. (3.38 per cent), and Bikaji Foods International Ltd. (3.29 per cent), reflecting a focus on companies with strong fundamentals and growth potential.

Risk and Return Profile

The fund exhibits mixed performance on risk-adjusted return metrics. While it has a lower beta (0.95) than its peers, indicating lower market sensitivity, its standard deviation (17.72 per cent) is higher than the category average (11.67 per cent), suggesting more volatility. Its Sharpe ratio (1.1) and alpha (4.55) are lower than the category average (6.8 and 7.8, respectively), indicating room for improvement in delivering excess returns.

Fund Management

The fund's success can be attributed to its experienced fund management team, which employs a bottom-up stock-picking approach, focusing on companies with strong growth potential and robust business models.

Conclusion

The Quant Small Cap Fund has demonstrated strong long-term returns and a robust investment strategy. While its risk-adjusted returns could be improved, its diversified portfolio and experienced management team make it a solid choice for investors with a higher risk appetite and a long-term investment horizon.

Disclaimer: The article is for informational purposes only and not investment advice.