Value funds are known for their distinct investing strategy. These are equity mutual funds that invest in companies that have fallen out of favour but still have strong fundamentals. Value investing constitutes the purchase of undervalued stocks that have a growth potential and are capable of providing long-term capital appreciation to the investors.
Value funds enable you to invest in stocks with lower downside risk but higher long-term profits. These funds provide investors with investment style diversification and the possibility for long-term wealth creation.
These funds are suitable for investors with an aggressive approach towards investing. Investors should essentially stay invested for a long duration to realise stable and significant gains. In order to mitigate the market volatility and other associated risks, investors must have a long-term investment horizon.
However, do note that since value funds adopt the value investing strategy they are high-risk high return investment proposition. In addition, be mindful of the value traps, value investing can act as double-edged sword. While you aim to invest in undervalued stocks, some stocks may go through a phase of underperformance, but if a certain stock underperforms consistently it will be a value trap.
Quant Mutual Fund has launched Quant Value Fund. It is an open-ended equity scheme investing in a well-diversified portfolio of value stocks. The fund house believes that, the key is to not get distracted by the popular narrative being propagated as the gospel truth in the markets. Using Predictive Analytics tools, the endeavour will be to decipher the true stature of the market.
Table 1: Details of Quant Value Fund
|Type||An open-ended equity scheme investing in a well-diversified portfolio of value stocks.||Category||Value Fund|
|Investment Objective||The primary investment objective of the scheme is to seek to achieve capital appreciation in the long-term by primarily investing in a well-diversified portfolio of value stocks. The AMC will have the discretion to completely or partially invest in any of the type of securities stated above with a view to maximize the returns or on defensive considerations. However, there can be no assurance that the investment objective of the Scheme will be realized, as actual market movements may be at variance with anticipated trends.|
|Min. Investment||Rs 5,000/- and in multiples of Re 1/-. Additional purchase Rs 1,000/- and in multiples of Re 1/-||Face Value||Rs 10/- per unit|
|Entry Load||Not Applicable||Exit Load||Nil|
|Fund Manager||– Mr Sandeep Tandon
– Mr Ankit Pande
– Mr Sanjeev Sharma
– Mr Vasav Sahgal
|Benchmark Index||NIFTY 500 Value 50 TRI|
|Issue Opens||November 10, 2021||Issue Closes:||November 24, 2021|
(Source: Scheme information Document)
The investment strategy for Quant Value Fund will be as follows:
Quant Value Fund aims to provide long-term capital growth by investing primarily in a well-diversified portfolio of companies that are selected based on the criteria of Relative value investing.
Relative value investing is an investment strategy where stocks are selected that trade for less than their perceived intrinsic values. It may also include stocks likely to benefit out of turnaround of business and value unlocking opportunities such as mergers, demergers, acquisition, etc.
The Scheme proposes to accumulate a portfolio of well-diversified stocks, which are available at a discount relative to their perceived intrinsic value through a process of ‘Discovery’ by using the VLRT investment framework. The discovery process would be through identification of stocks, which have attractive valuations in relation to Valuation Analytics, Liquidity Analytics, Risk Appetite Analytics, and Timing (VLRT).
The Scheme will invest in line with the investment manager’s views on the macro economy with a particular focus on the sentiments of the market participants through the interpretation of Quant Money Mangers’ Predictive Analytical tools and macro indicators.
The fund managers will follow a dynamic investment strategy taking defensive/aggressive postures depending on the overall risk-on / risk-off environment. The portfolio shall be reviewed consistently based on the macro-economic environment and changes will be made based on the data generated by the fund house analytics and on the discretion of the fund manager. All investment decisions are based on Quant money managers’ investment framework – VLRT.
- Valuation Analytics: Knowing the difference between price and value.
- Liquidity Analytics: Understanding the flow of money across asset classes.
- Risk Appetite Analytics: Perceiving what drives market participants to certain actions and reactions.
- Timing: Being aware of the cycles that govern how the other three dimensions interact.
Under normal circumstances, the asset allocation will be as under:
Table 2: Asset Allocation for Quant Value Fund
|Instruments||Indicative Allocation (% of net assets)||Risk Profile|
|Equity and Equity related instruments||65||100||High|
|Debt & Money Market Instruments||0||35||Low to Medium|
|Units issued by REITs & InvITs||0||10||Medium to High|
(Source: Scheme information Document)
Who will manage Quant Value Fund?
Mr Sandeep Tandon, Mr Ankit Pande, Mr Sanjeev Sharma and Mr Vasav Sahgal will be the dedicated fund managers for Quant Value Fund.
Mr Sandeep Tandon is Fund Manager – Equity at quant Mutual Fund. Mr Tandon is an MBA and has over 23 years of experience in the financial industry. Prior to being the founder of quant Mutual Fund, he was associated with ICICI Securities as Vice President, Economic Times under Research Bureau, and IDBI (now Principal) Asset Management as a part of core asset management team. He manages quant Multi Asset Fund, quant Small Cap Fund, and quant Absolute Fund.
Mr Ankit Pande is a Fund Manager (Equity) at quant Mutual Fund and has over 8 years of experience in Indian equities and of 3 years in software products. His qualification includes, (U.S. based) CFA charter in 2015 and MBA from the Chinese University of Hong Kong in 2017. He has won the Thomson Reuters StarMine Award for best stock picker in the IT sector in 2014 and is a lifetime member of the Beta Gamma Sigma honour society. Prior to joining quant Mutual Fund he was associated with Infosys’ Finacle in banking software, began his career in finance with equity research in 2011.
The other schemes managed by Mr Pande are; quant Absolute Fund, quant Large and Mid-Cap Fund, quant Infrastructure Fund, quant Focused Fund, quant Mid Cap Fund, quant Consumption Fund, quant Tax Plan, quant Small Cap Fund, quant Active Fund.
Mr Sanjeev Sharma is Fund Manager (Debt) at quant Mutual Fund and has over 17 years of work experience, which includes 13 of experience in the financial market. His qualification includes, PGDBA (Fin.), M.com and CerTM (Treasury & Forex Risk). He specializes in identifying crucial inflexion points in securities. Prior to this Mr Sharma was working with PACE group of companies as Fund Manager, Tipsons Financial Services Pvt. Ltd. as Associate Vice President, Escorts Mutual Fund as Fund Manager – Fixed Income.
The other schemes Mr Sharma manages are; quant Multi Asset Fund, quant Dynamic Bond, quant Liquid Plan, quant Money Market Fund, quant Absolute Fund, quant Large and Mid-Cap Fund, quant Focused Fund, quant Mid Cap Fund, quant Small Cap Fund, quant Active Fund and quant ESG Equity Fund.
Mr Vasav Sahgal is Fund Manager (International Equities) at quant Mutual Fund. He is B.com graduate and Passed CFA level 3. He has more than four and a half years of experience in Equity and Fixed Income research, Portfolio Management, Data Analytics and Python Programming. The other schemes managed by Mr Sahgal include quant Absolute Fund, quant Large and Mid-Cap Fund, quant Infrastructure Fund, quant Focused Fund, quant Mid Cap Fund, quant Consumption Fund, quant Small Cap Fund, quant ESG Equity Fund., quant Quantamental Fund and quant Multi Asset Fund.
Fund Outlook – quant Value Fund
Quant Value Fund is based on relative value investing strategy. It aims for a well-diversified portfolio of companies that are selected with the help of quant money managers’ investment framework.
The scheme will invest in undervalued stocks selected based on the VLRT framework. This unique analytical framework enables ‘predictive analytics’ encompasses all available asset classes and sectors, formulating a multi-dimensional research perspective.
The scheme endeavours to look for emerging opportunities and invest in undervalued stocks with growth potential. In addition high quality stocks that are currently undervalued due to dynamic market conditions and are expected to rise once the market recovers.
Being a value-oriented fund, the performance of this scheme will depend on the fund manager’s ability to select undervalued stocks with growth potential, diversify the portfolio across sectors and market caps and hold on to it until its full potential is realized.
The scheme is suitable for long-term investors seeking investment in value stocks, who can stick through the various market cycles and have a high-risk appetite with long investment horizon to survive the market volatility.
This article first appeared on PersonalFN here