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Subbu's Solution

Mary Poppins Returns - What's in Store for Equities in 2019?

Is the release of “Mary Poppins Returns” with its heartwarming messages a sign of better times to come and prevail in 2019?

The original Mary Poppins was released in 1964, the year in which Martin Luther King was awarded the Nobel Peace Prize.

With the release of the sequel, let us hope to see a globally accepted leader bring in peace after a terrible 2018 which witnessed a number of wars (civil, military, trade) and assassinations.

Returns from the Quantum Funds in 2018:
From an equity market perspective, it was a terrible year for the broad indices. While the S&P BSE Sensex was up by 7.2%, the S&P BSE Midcap index was down by 12.5% and S&P BSE Smallcap index was down by 22.9%.

Quantum Long Term Equity Value Fund generated a return of 0.6% (See Table 1 to view complete fund performance) and despite the decline in the indices, it had a satisfying year as it grabbed the opportunity presented in October when stock prices in the financial sector declined. For the year, it stood out well within the value category of funds.

The 10 year government bond yielded 7.3% at the start of the year moved up to 8.2% and then was back to 7.4%. The Quantum Dynamic Bond Fund from Quantum Mutual Funds returned 4.1% while the Quantum Liquid Fund returned 6.6% (See Table 2 & 3 to view complete fund performance).

Real estate in general was lackluster with downward trend in prices seen in some cities.

Art also possibly suffered as liquidity crises post the IL&FS debacle did affect that asset class.

Quantum Gold Fund returns was at 6.9% (See Table 4 to view complete fund performance).

Table 1:
The Scheme is co-managed by Mr. Atul Kumar and Mr. Nilesh Shetty.
For other Schemes Managed by Mr. Atul Kumar and Mr. Nilesh Shetty please Click here
Mr. Atul Kumar is the Fund Manager effective from November 15, 2006
Mr. Nilesh Shetty is the Associate Fund Manager effective from March 28, 2011.

Table 2:
For other Schemes Managed by Mr. Pankaj Pathak please Click here
Mr. Pankaj Pathak is the Fund Manager effective from March 01, 2017.

Table 3:
For other Schemes Managed by Mr. Pankaj Pathak please Click here
Mr. Pankaj Pathak is the Fund Manager effective from March 01, 2017

Table 4:
For other Schemes Managed by Mr. Chirag Mehta please Click here
Mr. Chirag Mehta is the Fund Manager effective from May 01, 2009.

CY 2019 may be a difficult time, based on the poor political and macro-economic environment. The Stock markets may see a sell-off as fears over political instability and macro-economic drift will frighten short-term money. Inflation is likely to pick up as government spending increases. Capacity utilisation increase with no increase in capex plan will also result in inflationary pressures as supply reduces. Increase in interest rates may be curtailed despite fears of inflation as India heads into election and there may be government pressure on the banking system to keep the interest rates low. Fears of inflation and no increase in interest rates may see the currency decline further by 5 to 10%.

The unexpected event which may further accentuate the volatility will be the pull back by local investors from their investments in mutual funds due to nervousness caused by volatility. Over the last few years local investors have been tremendous supporters of the market as seen in the table below:

YearFII Flows (In INR Billion)DII Flows (In INR Billion)
CY 2014971238
CY 2015178719
CY 2016206480
CY 20175131,159
CY 2018-3301,148
Total1,5373,745

Over the next few months the focus will be on election outcomes. Any disruption due to unexpected outcomes will likely be another opportunity for the analysts and fund managers at Quantum Asset Management Company. Needless to say that, they continue to remain focused on the fundamentals of the company and will take advantage of any jolt in the market by deploying the remaining cash, rebalancing the weights and recommending further increase in your capital allocation.

As an aside, we would like to commemorate the passing of Mr. John C. Bogle who was the founder of Vanguard, and a firm believer in the lost cost, value investing philosophy.

Data Source: Bloomberg
Product Labeling
Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
Quantum Long Term Equity Value Fund

(An Open Ended Equity Scheme following a Value Investment Strategy)
• Long term capital appreciation

• Invests primarily in equity and equity related securities of companies in S&P BSE 200 index
Quantum Long Term Equity Fund
Investors understand that their principal will be at Moderately High Risk
Quantum Gold Fund ETF

(An Open Ended Scheme Replicating / Tracking Gold)
• Long term returns

• Investments in physical gold
Quantum Liquid Fund

(An Open Ended Liquid Scheme)
• Income over the short term

• Investments in debt / money market instruments
Quantum Long Term Equity Fund
Investors understand that their principal will be at Low Risk
Quantum Dynamic Bond Fund

(An Open Ended Dynamic Debt Scheme Investing Across Duration)
• Regular income over short to medium term and capital appreciation

• Investment in Debt / Money Market Instruments / Government Securities
Quantum Long Term Equity Fund
Investors understand that their principal will be at Moderate Risk
* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer:

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.

Risk Factors: 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 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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