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  • Feb 13, 2017
    Nilesh Shetty - Associate Fund Manager - Equity

    In January 2017, the BSE Sensex gained 3.88% on total return basis. Mid cap and small cap stocks had a better run in the first month of 2017. BSE midcap index rose by 6.87%, while small cap index appreciated by 7.40%. Among sectors, metal, consumer durables and telecom were notable gainers. The IT and pharmaceutical sectors were among those not favoured..

    FIIs underwent muted activity during the month, having sold stocks worth USD 6 Mn. Domestic investors (DIIs) were net buyers to the tune of USD 697 Mn in January. Among DIIs, mutual funds were buyers of USD 803 Mn, while insurers sold stocks worth USD 106 Mn. During the month, the rupee appreciated 0.09% versus the US dollar.

    GDP growth in the developed markets remains subdued with the exception of the US. The Eurozone and Japan continue to follow loose monetary policy to revive growth and inflation. Their objectives haven’t been achieved so far. The recent increase in inflation in some parts of developed world has been due to rising energy prices (crude oil) rather than consumer demand.

    There have been protectionist measures taken in various parts of the world. Brexit and the US election results are a vote against globalization. With incomes stagnating or falling in many cases, major sections of population have been voting against free trade and the movement of foreign workers within their borders. This has implications going for many companies. Either they may lose out on foreign demand or their costs could rise. The Indian IT sector is a case in point, with the US planning to double the minimum wage of persons working on H-1B visas.

    A major event at the start of February was the presentation of the Union Budget for 2017-18. The date of the presentation was preponed by a month and, for the first time, the railway budget was merged into it. The Budget had higher resource allocation to the agricultural and rural sector. Before the Budget, expectations were high for a simplification of taxes (withdraw exemptions) and lower tax rates. Except for reducing taxes for smaller businesses, it didn’t deliver much on this front. The fiscal Deficit is likely to be controlled to 3.2%, signifying that the Government is prudent in managing its finances. The Government also showed its intent to bring transparency to political funding and to control black money by banning cash transactions above Rs 3 lacs. If implemented well, these measures will have a long term positive impact on the integrity of Indian political parties.

    Many companies announced their 3rd quarter results for the fiscal year 2016-2017. Data from the impact of the recent demonetization on corporate results were monitored. Sectors such as real estate, two wheelers and FMCG have witnessed lower volume growth or even decline during this period. Many other sectors have surprisingly been quite resilient and posted good results. On the downside, capital expenditure by the corporate sector has still not picked up. There were expectations since May 2014, when the new government was elected, that corporate spending would pick up. It has been an almost 3-year-long wait.

    We remain optimistic about Indian equities in the long run. India is unlikely to be impacted much economically from the unfavourable situations in the other parts of globe. In fact, it has benefited from the fall in commodity and energy prices. India is a bright spot among world equities, given its high GDP growth which is likely to continue. So far, demonetization hasn’t had a big impact on the listed companies, although it needs to be monitored in the coming months. India is also relatively less impacted from global protectionist measures as its consumption is 65% of the GDP. We are relatively more insulated on exports for economic growth. Investors can add to their position in equity to benefit from higher corporate earnings growth. The valuation of equities also appears to be fair, and not excessive.

    Data Source: Bloomberg


    Disclaimer, Statutory Details & Risk Factors:

    The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

    Mutual fund investments are subject to market risks read all scheme related documents carefully.

    Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

  • Feb 13, 2017
    Murthy Nagarajan - Head - Fixed Income

    The RBI’s Monetary Policy Committee (MPC), which decides interest rates, voted unanimously to keep the Repo rate unchanged at 6.25%. This was the third meeting of the newly constituted MPC, and the third 6-0 vote by the members.

    We had expected the RBI to cut the Repo rate by 25 bps to 6.0% based on our view that inflation will remain well below the RBI’s immediate target of 5.0%. The budget announced by the government was not populist and non-inflationary, and that GDP growth will be lower than estimated. Our projection of the rate of inflation and GDP growth was spot-on. However, we were wrong about the MPC’s assessment of the data.Not only did the MPC keep the rates unchanged, but it has also changed its monetary policy stance from accommodative to neutral. (*)

    This technically means they do not see scope for any immediate rate cuts and even if they do, the bar for that rate cut is set very high.

    At the press conference, Dr. Viral Acharya, the new Dy. Governor (in-charge of monetary policy), mentioned global oil, commodity prices and the strength of the US dollar as potential risks to the inflation outlook, thus warranting a change in the policy stance from accommodative to neutral. The fact that the MPC has altered its stance despite lowering its own inflation and growth projection (from the October and December review), indicates their serious intent to achieve the 4.0% inflation target over the medium term.

    The statement was fairly affirmative about it too: “The Committee remains committed to bringing headline inflation closer to 4.0% on a durable basis and in a calibrated manner”.

    This change in stance and the commitment to secure the 4.0% target suggests to us that we might have actually reached the end of the current rate-cutting cycle and that the RBI will remain in a long pause at 6.25%.

    The rate pause and the stance change have also sent a strong signal to the bond market on the market yield expectations. We do not expect bond yields to fall, and in fact the 25–30 bps sell-off seen after the policy announcement is indicative of the fact that the best times in the bond markets are behind us.

    The bond markets have gone on a significant run since August 2013 with bond funds returning double digits. But investors would do well now to lower their return expectations from bond funds. Capital gains may not be the driver of Indian bond returns. Also, if the RBI’s warnings about global inflation come to fruition anytime in the near future, the bond market outlook will move to rate hikes instead of rate cuts further depressing returns from bond funds.

    As the RBI signaled the end of the rate cycle, investors in bond funds may consider it a signal of the end of the superlative returns they have earned in the last 3 years.

    (* When the RBI cuts rates, it signals an ‘accommodative (easy)’ stance. But when it wants to hold rates for a prolonged period, it moves its stance to neutral. It becomes ‘restrictive (tight)’ when it intends to hike rates to fight inflation.)

    Data Source: Bloomberg, RBI, Indiabudget.nic.in


    Disclaimer, Statutory Details & Risk Factors:

    The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. Quantum AMC / Quantum Mutual Fund is not guaranteeing / offering / communicating any indicative yield on investments made in the scheme(s). The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

    Mutual fund investments are subject to market risks read all scheme related documents carefully.

    Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

  • Feb 13, 2017
    Chirag Mehta - Senior Fund Manager - Alternative Investments

    January has been the strongest month for gold over last decade. This fact is driven by the two biggest buyers getting involved in the gold market: There is a rush of Chinese buyers during the lunar New Year, and Indians prepare for the marriage season. Keeping up with seasonality, this year has been no different. Despite the reflationary headwinds following Trumps presidency, gold managed a strong rebound as rising uncertainty from Trumps first policies led to increased gold allocations. Weaker than expected economic data along with Trump’s unconventional rhetoric on trade and currencies led to a depreciating U.S. dollar, further supporting gold prices. All in all, gold ended on a strong footing at $1210.65 an ounce, a gain of +5.07% for the month.

    Behind gold's ascendancy have been whiffs of inflation and the potential of a trade and/or currency war as Trump introduces his “America first” policies. There are early signs of potentially higher inflation down the road. Inflation is rising faster than many investors may realize in pockets like housing prices, uncontained medical inflation, rising wages and more. Putting the interest of one’s nation first may be understandable, but some caution should be expressed about the aggressiveness of Trump’s tone in today’s globalized world. Slapping a 20% tariff on Mexican imports to pay for the wall is in essence a 20% tax on the American public. Americans will pay for the wall in higher cost of goods. Trump has also been very clear about his goal of slowing US corporate outsourcing of labour to foreign countries, which could end up being quite inflationary.

    There is fear that Trump may start a trade war, furthering a renewed currency devaluation race. Economic growth in the U.S. slowed more than what was forecasted last quarter on the biggest trade drag in six years. Net exports subtracted 1.7 percentage points from expansion in the October-December period, as dollar strength was likely a drag on growth. Should the new Trump administration push for a weaker dollar, this could lend support to gold. In an interview with the Wall Street Journal, Trump said that the US dollar was, “too strong.” “Our companies can’t compete with them [Chinese companies] now because our currency is too strong. And it’s killing us.” If there is turmoil in currencies, gold can shoot up sharply. On the other hand, if currencies stabilize, expect gold to drift down.

    In only his first weeks, we have seen President Trump initiate procedures that would encompass massive infrastructure projects, like the wall between the United States and Mexico, and remove major regulatory policies, as in the case of the Keystone pipeline. Although it is still extremely early in this new administration, it seems many threads that were present in Trump’s campaign promises are transforming themselves into policy and procedures. It appeared to surprise some traders when the Fed held, but given the recent turbulence in equity markets and some discomfort on how the administration is executing strategy, it appeared to be a given that the Fed would wait. The language, however, suggested that the Fed was eyeing inflation, which may be the set-up for a March hike, but elections in Germany and France may give the Fed enough excuse to skip action at the March meeting. Global Central Banks are in a holding pattern as they wait and assess the effect of policy implementation and the leadership style of President Donald Trump.

    January jobs printed well above the consensus estimates of 180,000. A number above the 200k mark should have ideally placed a March Fed hike firmly on the table. Prices, however, reacted higher, likely because of downward revisions in previous months and a slight reduction in the wage index. Traders took it as a set-up for an excuse for the Fed to wait in March, which hurt the dollar and pushed traders to cover some shorts. The Fed is currently more focused on inflation and Trump’s fiscal policies. Maybe the Fed does nothing and lets the economy roil, and equities bubble higher and inflation run hotter, and worry about the consequences later in the year.

    The market-determined long-term real interest rates have increased by 40 basis points in the aftermath of the U.S. a presidential election, which means that the Fed is already behind the curve. Hence, it is not simply that higher interest rates threaten growth. It seems that the opposite is true right now: interest rates are higher since growth expectations are stronger. Indeed, markets seem to be comfortable with the Fed’s move, as credit spreads are still relatively low. There is agreement that the economic outlook has improved, which justifies higher interest rates. In other words, the Fed’s tightening is considered as a vote of confidence in the economy and a sign of policy normalization after the unprecedented measures implemented after the financial crisis.

    The major fundamental forces affecting the gold market in 2017 will be the strength of the U.S. dollar, the dynamics of the real interest rates, and the level of policy-induced fear in the markets. The much anticipated political and market uncertainty diminished after China’s turmoil, the Brexit vote and the U.S. presidential election. The world is full of risks, but the sad fact for the gold market is that financial markets showed great resilience to them in 2016, shrugging off practically all bad news, or even using them to rise up. Therefore, although investors should not downplay the potential threats to the global economy, they should focus on the relationship between gold and the U.S dollar in light of real interest rates.

    We believe that the fundamental outlook for the gold market may not be so encouraging until people expect Trump’s reflationary forces to mend the economy. However, as markets lose their faith in Trump’s pro-growth policies or as financial turmoil forces the Fed to adopt a more dovish stance, gold should start heading northwards. However, aggressive Trump policies could prepone gold’s ascent by wreaking havoc in the currency and asset markets, causing people to drive into assets like gold in their uncertainty.

    The world is in great disequilibrium, both with respect to the global economy as well as geopolitics. There exist more uncertainties than certainties in the global macroeconomic environment of which Trump’s presidency is a big unknown. We believe that barring the near term, gold prices should start moving gradually upwards in 2017.

    Source: The World Gold Council, Bloomberg


    Disclaimer, Statutory Details & Risk Factors:

    The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

    Mutual fund investments are subject to market risks read all scheme related documents carefully.

    Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

  • 16th February, 2017
    Dear Investor,

    I begin this email by saying a big Thank You to you. Your fund house, as on the evening of Feb 10, 2017, has surpassed the Rs. 1,000 Crore mark in terms of the Total Net Assets we manage.
    This is proof of the vision and patience of investors like you, who have entrusted your hard-earned savings with a chhota fund house that 'has no international backing'.

    It is thanks to you that we have achieved this milestone, and we have several such milestones to achieve together.

    Quantum's investment philosophy and philosophy towards our investors will never change, no matter what. Our core of being a value-investment based, low-cost fund will never change, irrespective of the AuM numbers we achieve. Hence, our earlier communication to you regarding the reduction of our expense ratios as we reach those AuM thresholds we aim for.

    We have reached 1,000 Crores of AuM; add another 1,000 and we will drop our expense ratios for the Quantum Long Term Equity Fund (QLTEF). The Expense Ratio of the Quantum Tax Saving Fund will also align with that of the QLTEF, irrespective of the AuM levels of the Quantum Tax Saving Fund. The other funds we manage will follow a similar pattern, too. This is a reflection of our commitment of keeping our costs low and passing on the benefits of higher Assets under Management (AuM) to investors like you.

    Click here to view Expense Ratio details for all Quantum funds

    The Importance of a Falling Expense Ratio

    The importance of a low expense ratio was best highlighted by this article written by Subbu way back. The article appropriately highlights the difference a fund with a lower expense ratio makes as compared to a fund with a higher expense ratio.

    As the markets underlying each fund are volatile, fund performance is fluid; expense ratios, on the other hand, are at set levels. This means that investors have to bear the expenses of operating the fund, irrespective of market movement and, therefore, fund performance. That is why a low expense ratio combined with great fund performance is optimal for returns.
    Do not forget the power of compounding too. A lower expense ratio means that more of your money gets invested. That little difference, over time, can accumulate into a huge amount thanks to the power of compounding, which has been explained in this article .

    We will continue tweaking our products and processes in terms of expense ratios in a way that benefits the investor the most. Having said that, the mutual fund industry in India remains severely underpenetrated. Many investors require guidance from someone well versed in both, financial matters as well as the local language. Going forward, Quantum will strive to bring right and like-minded distributors possessing the qualities above to the fold.

    Working with Distributors with a Transparent Commission Model

    Although reaching this landmark is a reason to smile, we are very far from achieving our vision, which is every Indian saver should be investor with Quantum Mutual Fund and should benefit from our long term, value-based, Quantum investment philosophy. We have taken the first micro-step in that direction with the crossing of this threshold and expanded our reach with the launch of the Distributor/Regular Plan. While we do not chase AuM numbers and strive to be the most respected, rather than the largest, fund house in the country, we have, in our earlier communication to you, explained the rationale behind the launch of our Distributor/Regular Plan.

    To reiterate, as an investor with us, you need to know that India's first Direct-to-Investor mutual fund is not changing its core and that we will continue to offer our Direct Plans to all investors.

    All your existing investments, irrespective of whether they have come through distributors, will remain in our Direct Plans at the existing expense ratio. However, we recognize that many other investors may need the assistance of a distributor to plan their investments. It is for their benefit that we are launching a Regular Plan by which we can pay the distributor a fee to cover their costs, structured as below.

    ExpensesUpfront CommissionTrail Commission
    Year 1 Year 2 Year 3 Year 4 onwards
    Total Commission Paid00.15%0.20%0.25%0.15%
    Borne by      
     - Regular Plan Investors00.15%0.15%0.15%0.15%
     - Quantum AMC00.00%0.05%0.10%0.00%

    Commissions stated are excluding service tax and any other statutory levies, which will be borne by investors of the Regular Plan and Quantum AMC as per the table above For Regular Plan investors, any payouts above 0.15% will be borne by Quantum AMC.

    In keeping with our philosophy of being a low-cost fund, the commission structures proposed here are amongst the lowest in the industry, if not the lowest. The aim is not to make distributors rich, but to compensate them fairly for their advice and for the expenses which they may bear. Further, the distributor gets rewarded only if the investors' savings remain with us for the long term and not if he switches investments in and out of our funds: the distributor earns a higher commission only after the completion of 24 months, thereby encouraging the culture of long-term investment.

    We believe all Indian investors deserve sensible, low-cost opportunities to participate in the market. With Quantum, you will always have that opportunity. We look forward to sharing the fruits of our future growth with our investors. After all, we couldn't have made it this far without you!

    Product Label

    Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
    Quantum Tax Saving Fund 
    (An Open-ended Equity Linked Savings Scheme)
    •Long term capital appreciation

    • Investments in equity and equity related securities of companies in S&P BSE 200 index and to save tax u/s 80 C of the Income Tax Act. Investments in this product are subject to a lock-in period of 3 years

    Investors understand that their principal will be at Moderately High Risk
    Quantum Long Term Equity Fund
    (An open-ended equity scheme)
    • Long term capital appreciation and current income

    • Investments in equity and equity related securities of companies in S&P BSE 200 index


    * Investors should consult their financial advisers if in doubt about whether the product is suitable for them.


    Disclaimer, Statutory Details & Risk Factors:

    The views expressed here in this article are for general information and reading purpose only and do not constitute any guidelines and recommendations on any course of action to be followed by the reader. The views are not meant to serve as a professional guide / investment advice / intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or mutual fund units for the reader. The article has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been solicited based upon the information provided herein, due care has been taken to ensure that the facts are accurate and views given are fair and reasonable as on date. Readers of this article should rely on information/data arising out of their own investigations and advised to seek independent professional advice and arrive at an informed decision before making any investments.

    Mutual fund investments are subject to market risks read all scheme related documents carefully.

    Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme(s) are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme(s) may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme(s). Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-) Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.