Welcome to PersonalFN’s weekly analysis on diversified equity mutual funds! In this issue, we have analysed Quant Multi Asset Fund, highlighting its performance, peer comparison, investment strategy, fundamentals, portfolio, and suitability.

Quant Multi Asset Fund is a well-performing Multi Asset Allocation Fund that follows a nimble investment approach to allocate assets based on market conditions and has exhibited commendable performance in recent years.

What is the growth of Rs 10,000 invested in Quant Multi Asset Fund five years ago?

Past performance is not an indicator of future returns
Data as of August 06, 2024
(Source: ACE MF, data collated by PersonalFN) 

Incepted in March 2001, Quant Multi Asset Fund was initially structured as a debt-oriented fund. In 2018, it transitioned to a fund focusing on multi asset investment after the change in the AMC sponsorship from Escorts to Quant Group. It now has the mandate to follow a dynamic portfolio management strategy, diversifying into equity, debt, and commodity (gold and silver) assets by allocating a minimum of 10% in each asset class. The fund also allocates some assets in REITs & InvITs and Derivatives.

Quant Multi Asset Fund follows an adaptive asset allocation strategy to benefit from dynamic market conditions. For instance, if the valuations in the equity market turn expensive, it will trim its equity exposure while simultaneously increasing exposure to other asset classes such as debt, gold, REITs & InvITs, etc. While the past performance of Quant Multi Asset Fund prior to 2018 is not directly comparable due to change in its investment strategy, the fund has performed well under its current mandate, outpacing the CRISIL index and its peers by an exceptional margin. As a result, the fund attracted investors’ attention and its corpus has nearly tripled to Rs 2,605 crore as of July 2024.

Its strategy of identifying momentum driven stocks in the equity segment along with agile management of the portfolio across asset classes has enabled it to reward investors with superior gains. In the last five years, Quant Multi Asset Fund’s NAV grew at a CAGR of 29.8% compared to a growth of 16.3% in the CRISIL Hybrid 35+65 Aggressive index. An investment of Rs 10,000 in Quant Multi Asset Fund five years back would have now appreciated to 36,933 compared to a valuation of Rs 21,290 in the index.

How has Quant Multi Asset Fund performed on a rolling return basis?

Scheme Name	Corpus (Cr.)	1 Year	2 Year	3 Year	5 Year	7 Year	Std Dev	Sharpe
Quant Multi Asset Fund	2,605	32.61	23.22	29.52	26.91	19.73	14.11	0.35
ICICI Pru Multi-Asset Fund	43,929	27.51	21.40	25.67	19.35	16.58	8.76	0.55
Tata Multi Asset Opp Fund	3,051	22.53	16.00	18.10	—	—	8.17	0.39
Nippon India Multi Asset Allocation Fund	3,854	26.57	16.74	17.55	—	—	9.06	0.37
UTI Multi Asset Allocation Fund	2,913	31.22	19.47	16.53	13.51	11.31	8.91	0.41
HDFC Multi-Asset Fund	3,141	19.83	14.06	15.70	15.08	12.15	7.00	0.37
SBI Multi Asset Allocation Fund	5,645	24.54	16.37	15.34	14.26	11.87	7.26	0.39
Axis Multi Asset Allocation Fund	1,246	14.90	7.55	11.83	13.74	11.88	11.11	0.15
Motilal Oswal Multi Asset Fund	102	16.08	9.69	8.16	—	—	5.84	0.17
CRISIL Hybrid 35+65 – Aggressive Index		19.31	12.65	14.50	14.05	12.84	9.48	0.26

The securities quoted are for illustration only and are not recommendatory.
Returns are on a rolling basis and in %. Direct Plan-Growth option. Those depicted over 1-Yr are compounded annualised. Risk ratios are calculated over a 3-year period assuming a risk-free rate of 6% p.a.
Data as of August 06, 2024
(Source: ACE MF, data collated by PersonalFN)
Please note, this table only represents the best-performing funds based solely on past returns and is NOT a recommendation. Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully before investing. Past performance is not an indicator for future returns. The percentage returns shown are only for indicative purposes.

Quant Multi Asset Fund has registered superior growth across most time frames. In the last 1-year, 2-year and 3-year periods, the fund generated a remarkable lead over the category average of around 6 percentage points on a rolling returns basis and also significantly outperformed the CRISIL Hybrid 35-65 Aggressive index. Over the longer time frames of 5 years and 7 years, Quant Multi Asset Fund tops the returns chart with a lead of 7-13 percentage points over the index and 6-10 percentage points over the category average.

The volatility (standard deviation) registered by Quant Multi Asset Fund at 14.11% is the highest in the category and much higher than the benchmark’s 9.48% and the category average of 8.91%. However, the remarkable returns in recent years has enabled it to reward its investors handsomely by generating superior risk-adjusted returns as denoted by its Sharpe ratio.

What is the investment strategy of Quant Multi Asset Fund?

Being categorised as a Multi Asset Allocation Fund, Quant Multi Asset Fund is mandated to invest a minimum of 10% of its assets in three different asset classes. Accordingly, the fund focuses on dynamic management of the portfolio across equity, debt, and gold to navigate the tides of volatility with an aim to offer satisfactory risk-adjusted returns.

The scheme follows the fund house’s proprietary VLRT framework viz. Valuations, Liquidity, Risk, and Timing to determine allocation into each of the three asset classes. Here are the key features of the framework:

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

Time: Being aware of the cycles that govern how the other three dimensions interact

The fund holds many of its stocks with a short-term view, and as a result, Quant Multi Asset Fund usually recorded a high turnover of 200-350% in the past. Its debt allocation in high credit quality and liquid papers, while it has also invested in Gold and Silver ETFs and REITs & InvITs for diversification.

What are the top portfolio holdings in Quant Multi Asset Fund?

Holding in (%) as of June 30, 2024
(Source: ACE MF, data collated by PersonalFN) 

As of July 31, 2024, Quant Multi Asset Fund allocated 40.6% of its assets in equities, 10.4% in Derivatives – Futures, 10.4% in Gold and Silver ETFs, 5.9% in REITs & InvITs, 10% in debt instruments, and the balance in cash. QMAF invests in a compact portfolio of about 10-20 stocks. It currently holds higher exposure to large-cap names such as ITC, LIC of India, Reliance Industries, JIO Financial Services, and Tata Power. The top 5 stocks account for 38% of its assets. It also currently holds significant exposure to derivatives for hedging purpose.

In the last two years, Quant Multi Asset Fund benefitted the most from its holdings in Reliance Industries, LIC of India, JIO Financial Services, and Tata Power Company that have risen significantly value since the time the fund added them in its portfolio. Moreover, it booked profit in SAIL, HDFC Bank, Hindalco Industries, Bikaji Foods International, GAIL (India), Jindal Steel & Power, Orchid Pharma, Adani Power, and Britannia Industries.

Sector-wise, Quant Multi Asset Fund carries substantial allocation to Finance and Consumption that collectively form 35.8% of its assets. It also diversification to Petroleum, Power, Engineering, and Pharma. Its debt allocation comprises exposure to high quality treasury bills and government securities currently carrying average maturity of 0.6 years.

Is Quant Multi Asset Fund suitable for my investment goals and risk tolerance?

Quant Multi Asset Fund is quick in its approach to shift allocation across market caps, sectors, and asset classes, depending on the market dynamics and outlook. Accordingly, its turnover ratio is higher at around 350%. This strategy has worked in the fund’s favour giving it the opportunity to generate high alpha. Notably, Quant Multi Asset Fund struggled to limit the downside risk during the 2020 market crash but showed a noteworthy recovery in the ongoing bull phase. Thus, the fund has the potential to do well over complete market cycles.

Due to the dynamic investment strategy and frequent shuffling of the portfolio holdings, the volatility registered by Quant Multi Asset Fund is relatively higher. Nonetheless, it has compensated its investors well by generating higher risk-adjusted returns.

Quant Multi Asset Fund is suitable for investors looking for an agile scheme in the Multi Asset Fund category with an investment horizon of at least 3-5 years.

Watch this video to find out the best Multi Asset Funds of 2024:

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

This article first appeared on PersonalFN here