How Thoughtful Investors Don't Get Affected by Market Crashes

News portals have been flooded with headlines the past couple of weeks that have brought investors on the edge of their seats worried about the weakening cues in India and the world.

Investments in high risk asset classes like Equity and Bitcoin have fallen sharply by 8% approx. and 33% respectively this CY as of May 16, 2022. However, the High to Moderate risky asset classes such as short term bonds or gold have relatively performed better. Investors who have tried to follow trends and invested only in high-risk assets have witnessed losses in their portfolio.

However, as seen historically, generally asset classes move in cycles and are not predictable. For instance, when equities rose to 23% in Dec 21, Gold prices fell by 6%. Conversely, from the start of this CY, as equities corrected by ~2%, Gold prices rose by 8%. There’s no clear winning asset class. It is this knowledge that makes a Thoughtful Investor unrattled.

Thoughtful investing is allocating money to different asset classes so that it can help you achieve risk adjusted returns. Instead of blindly following trends and suffering portfolio declines, a thoughtful investor sustains through market losses through a well-defined diversification strategy.

Quantum Mutual Fund has time and again advocated the Simple 12:20:80 Asset Allocation Solution - to help investors build a balanced portfolio with either active or passive fund options.

Let’s see how this asset allocation strategy would have performed in comparison with the Nifty. The following table indicates how a diversification strategy would potentially give you similar returns with limited drawdowns.

Let’s understand the performance better using an example. Consider a Rs 1 lakh investment in the equity-gold portion of the 12-20-80 strategy vs. Nifty from the pre-COVID peak (17th January 2020) to the COVID market crash (23rd March 2020) period.

As you can see that the 12-20-80 strategy limited the downside risk and provided better portfolio stability during uncertain market conditions to the extent of 10%.

It’s never too late to safeguard your investments from the next downturn. Instead of looking for the next winning asset class or worrying about the next crash, diversify your portfolio for long term risk adjusted returns.

The markets may experience a further correction due to interest rate hikes rising commodity prices and other challenges confronting the economy. Looking at the macroeconomic parameters globally and in India, here’s how the asset classes are poised to perform:

Do not get lured by latest trends or market swings, instead safeguard your investments with prudent asset allocation, to generate wealth in the long term.

So, are you ready to become a thoughtful investor?

#S&P BSE 500 TRI, ##S&P BSE 200 TRI, ###S&P BSE Sensex.

Data as of April 30, 2022.

Past performance may or may not be sustained in future.

Load is not taken into consideration in scheme returns calculation.

Different Plans shall have a different expense structure.

Returns are net of total expenses and are calculated on the basis of Compounded Annualized Growth Rate (CAGR).

#with effect from December 01, 2021 Tier 1 benchmark has been updated as S&P BSE 500 TRI. As TRI data is not available since inception of the scheme, benchmark performance is calculated using composite CAGR S&P BSE 500 index PRI Value from March 13, 2006 to July 31, 2006 and TRI Value since August 1, 2006.

##TRI data is not available since inception of the scheme, Tier 2 benchmark performance is calculated using composite CAGR S&P BSE 200 index PRI Value from March 13, 2006 to July 31, 2006 and TRI Value since August 1, 2006

The Fund is managed by Mr. Sorbh Gupta and Mr. George Thomas. Mr. Sorbh Gupta has been managing the fund since Dec 01, 2016. Mr. George Thomas has been managing the fund since April 01, 2022 Click here to view other funds managed by Mr. Sorbh Gupta and Mr. George Thomas.

#S&P BSE 200 TRI, ##S&P BSE Sensex TRI.

Data as of April 30, 2022.

Past performance may or may not be sustained in future.

Load is not taken into consideration in scheme returns calculation.

Different Plans shall have a different expense structure.

Returns are net of total expenses and are calculated based on Compounded Annualized Growth Rate (CAGR).

The fund is managed by Mr. Chirag Mehta since Nov 1, 2013. Mr. Chirag Mehta manages 4 Schemes of Quantum Mutual Fund. For other schemes managed by him, please Click here.

#Domestic Price of Physical Gold, ##CRISIL 10 Year Gilt Index.

Data as of April 30, 2022.

Past performance may or may not be sustained in future.

Different Plans shall have a different expense structure.

The fund is managed by Mr. Chirag Mehta. Mr. Chirag Mehta is handing the fund since May 19, 2011. For other funds managed by Mr. Chirag Mehta, please Click here.

Name of the Scheme & Primary Benchmark	This product is suitable for investors who are seeking*	Risk-o-meter of Scheme	Riskometer of Tier 1 Benchmark
Quantum Equity Fund of Funds An Open Ended Fund of Funds scheme Investing in Open Ended Diversified Equity Schemes of Mutual Funds	• Long term capital appreciation • Investments in portfolio of open-ended diversified equity schemes of mutual funds registered with SEBI whose underlying investments are in equity and equity related securities of diversified companies	Investors understand that their principal will be at Very High Risk
Quantum Gold Savings Fund An Open Ended Fund of Fund Scheme Investing in Quantum Gold Fund	• Long term returns •Investments in units of Quantum Gold Fund - Exchange Traded Fund whose underlying investments are in physical gold.	Investors understand that their principal will be at Moderately High Risk

Name of the Scheme & Primary Benchmark	This product is suitable for investors who are seeking*	Tier 1 Benchmark	Tier 2 Benchmark
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.	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.
The Risk Level of the Scheme in scheme Risk O Meter is basis it's portfolio as on April 30, 2022.

Disclaimer, Statutory Details & Risk Factors:

The views expressed here in this article / video 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. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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