MF Select

Quantum Long Term Equity Value Fund - Direct Plan

Reason for recommendation Many of you, who closely follow the performance of mutual funds will find it a little odd to see this fund being recommended. This is because the fund has underperformed its peers in the last couple of years. The reason being the fund is sticking to its mandate and following strict selling and buying of its holding based on the valuation and not the market condition. Hence, in the year 2017, when the market was hitting new highs, the fund remained in cash (16 per cent of net assets) and could not capitalised on it. 

Nonetheless, in the last 10 months, when the market has become volatile and valuation has corrected, we see this fund emerging as a winner having outperformed its category by a huge margin in the last one year. The fund holds 80 per cent of its asset in large-cap stocks. Moreover, 18 per cent of the corpus is in mid and small-cap stocks which help the fund generate better returns in case the market moves up. The fund is aggressive in its holdings. The maximum holding of the fund is in ‘cyclical’ stocks, where it holds 56 per cent of the stock compared to 48 per cent by its benchmark. Financial services and Consumer cyclical hold 27.37 per cent and 20.81 per cent of the total assets at the end of October 2018. The major holdings of the scheme are in Infosys, HDFC and Bajaj Auto. These stocks are from diversified sectors and have underperformed the market in the last couple of months; however, they are leaders in their category with strong management. Hence, we see the fund to be a good buy for our aggressive investors.