Questions from Path To Profit. Answered Wednesday, Dec 26, 2018
Path to Profit – Investor Meet that gives us an opportunity to interact with those who wish to learn more about investing. Given below are 3 questions that we fielded at a recently conducted event. We will keep releasing answers to such questions in subsequent mailers, so stay posted.
1. How many years should one wait for the result of value investing?
There is no predefined period, the longer the better when it comes to equity investing. Equity markets move in cycles which contain periods of growth and decline. Ideally the investment horizon should be short enough to at least see one business cycle which can be in the range of 5 years to 8 years. Moreover, when it comes to your investments, it is important that you link them to long term financial goals. Let’s say one of your life’s important goals is to fund your child’s education 10 years from now. Such goals require long term investment products in equity mutual funds which helps you achieve your financial goals. Once crucial factors such as age, investment horizon, and risk tolerance are determined by an individual, then selecting the right investment becomes easy.
2. As Quantum follows value investing, do you mean you invest in a small cap stock and stick to it till it becomes large-cap?
No. We are market cap agnostic. Value investing is primarily trying to arrive at a fair value of a business based on its fundamentals like cash flow generation ability, profitability, management quality, return ratios etc. and try and buy it at a discount to the intrinsic value. Hopefully the value of the business will move towards its intrinsic value. Moreover our investment universe is stocks (primarily included in S&P BSE 200 Index) with average daily trading volume of over a $1 million /day. In this case generally many small cap stocks are filtered out from our consideration.
The research team at Quantum is always looking for right opportunities to invest wherein there is a predetermined Buy and Sell limit for each stock which is actively covered by our research team. The limits are decided based on sustainable cash flow generating ability of a company and its long term valuation bands. Once a stock hits our buy limit it finds its way into our portfolio and once it hits our sell limit it exits our portfolio. We continue to focus on the basics like meeting companies and visiting suppliers and customers to ensure we do not miss anything in our research.
3. Is 'Value Investing' useful for senior citizens?
Value investing typically focusses on downside risks and hence in theory should fall less than growth investing when the markets fall. For senior citizens that may be appealing. But allocation to equity always carries greater risk irrespective of growth or value investing. Stocks are volatile in nature. However when it comes to your retirement minimizing risks and protecting your retirement corpus becomes very important. For senior citizens, given their age and low risk appetite they generally tend to look out for safe and stable investment options with the main objective of protecting their capital along with a fixed regular monthly income to manage their day-to-day expenses.
|Name of the Scheme||This 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
Investors understand that their principal will be at Moderately High Risk
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.