Dear Sharat, thank you for trusting us with your investments. At Quantum we always encourage our investors to have at least 10-20% of their investments in gold as means to diversify portfolio. To answer your question, the Gold Bonds are not yet issued by the government. RBI will start issuing them on 26 November, 2015. It is only after it is issued that the regulator - SEBI will take a call whether it will be allowed for investments under Gold ETFs. The Gold Bond scheme is restricted for sale as there is an annual cap of 500 grams per person, therefore even if the fund invests, it will be a negligible proportion of the fund’s total assets.
However in my view and with my experience with investors I think investors especially in India invest in gold ETFs essentially because it is backed by the physical gold and not backed by Sovereign Guarantee. Although the returns profile may be better in a Sovereign gold bond as compared to gold ETF, it eventually would be reliant on a government guarantee.
Congratulations on the beginning of your second innings Mr. Mehta. When it comes to asset allocation I generally suggest people to INVEST A LARGER PROPORTION in equities if you are young and proportionately reduce it as you age. Even at the time of retirement, I would advise a good amount of investment in equities- as long as you do not need any cash flows from this investment. This will allow your investment to grow and beat inflation, subject to high market risk. The accumulated equity assets could not only be of use to you, but can also is a great asset to bequeath for the next generation However if you need regular income from your investments, then lesser investments may be made in equities as you retire, and more amount in debt.
I do not know all the details of your needs etc- but purely based on your question, I feel that you could straightway start a SIP in equities rather than first invest in debt funds and then do an STP into equity. Do consult your financial advisor before taking any investment related decisions.
Dear Mr. Tarun, Quantum Long term Equity Fund follows a value investment style. We buy companies when they are available at a discount to their intrinsic value based on long term fundamentals, and sell companies when they trade at fair value or at a premium to what we believe is their fair value. It is a stock specific strategy and not linked to index levels. Over the last one year as company share prices have raised to levels we believed are not justified by fundamentals, we had to sell them from the portfolio, raising cash levels in the fund. A high cash level in a rising market has hurt near term performance. Despite the near term impact on performance, we believe over a longer cycle our strategy is in the best interest of the portfolio.
QLTEF has followed this strategy over the last ten years, and you can see returns since its inception. Similar underperformance can be noticed during the year 2007, when again our cash levels had soared. This was only to help us deploy the cash in 2008 during the economic crisis, when stocks were available at attractive valuations.
Mr. Pradeep, thank you for writing to us. It is such questions that help us clear the air in the investors mind regarding his/her mutual fund investments. Firstly, Expense ratio and Exit load are two very different things. The expense ratio is the annual fee that all funds or ETFs charge their investors. QLTEF has expense ratio of 1.25%, which is one of the lowest in the industry. Repurchase or redemption price is the price or NAV at which a scheme purchases or redeems its units from the investors. Therefore, while I assure you at Quantum there is no hidden charges, there is a formula that calculates at what rate the scheme will buyback your units. This formula is prescribed by the market regulator SEBI to all mutual fund houses:
Repurchase Price = Applicable NAV *(1 - Exit Load, if any)
So, at the time of redemption what happens is your repurchase price is dependent on the exit load of the scheme, which again depends on the number of days the units were allotted to you. The exit loads are applied on a variable basis depending on the term of the investment. Below is the Exit load for QLTEF.
The main intention behind charging high exit load is to make sure that the fund appeals to investors who are looking at long term investments and discourage speculators who wish to make quick money in a short span. This is especially true for equities, where investments are meant to be for long term. Moreover, if the investor stays invested for two years there is no exit load. In this case, the repurchase price will be that day’s actual NAV.
|Name of the Scheme||This product is suitable for investors who are seeking*||Riskometer|
|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 understand that their principal will be at Moderately High Risk
Subbu`s Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.
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 scheme`s objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks 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 (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.
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