Quant Mutual Fund announced the launch of the Quant Momentum Fund. The scheme opened for public subscription on October 30, 2023, and will close on November 13, 2023. The scheme re-opens for continuous sale and repurchase within five business days from the date of allotment.
What kind of mutual fund scheme is this?
This is an open-ended equity fund scheme following the momentum theme. This product is suitable for investors seeking
- To generate capital appreciation
- To invest predominantly in stocks exhibiting momentum characteristics.
The scheme will invest at least 80 per cent in equity/equity-related instruments of companies with strong profit potential based on Quant Mutual Fund’s momentum thesis and aims to forecast the expected return of stocks using momentum attributes and auto-correlations to optimize the risk-return trade-off. A combination of rigorous quantitative methodologies, risk-based analysis, and systematic portfolio construction will be used to achieve optimal investment returns.
The fund is designed for investors with a long-term horizon, high-risk appetite, and who are willing to participate in the fund house’s ‘momentum’ thesis which is mathematically built to identify winners continuously.
What is the main objective of investing in this fund?
The primary investment objective of the scheme is to achieve long-term capital appreciation for its investors. This objective will be pursued by strategically investing in a diversified portfolio of equity and equity-related instruments. The selection of these instruments will be based on a quantitative model meticulously designed to identify potential investment opportunities that exhibit the potential for significant capital appreciation over the specified investment horizon. There is no assurance that the investment objective of the scheme will be realized.
The fund is structured to benefit from opportunities arising from market randomness. In finance, momentum is the empirically observed tendency for rising asset prices or securities’ returns to rise further, and falling prices to keep falling. Momentum’s existence as a market anomaly is a puzzle that many leading financial theories find challenging to decipher. However, this presents an attractive investment opportunity that is popularly utilized on a global scale by opportunistic investors.
How may one invest in this scheme?
Investors can invest under the scheme with a minimum investment ofRs 5000 per plan/option and in multiples of Re 1. There is no upper limit for investment.
Under normal circumstances, the asset allocation of the scheme will be as follows:
| Instruments |
Indicative allocations (% of total assets) |
Risk Profile | |
|
Minimum |
Maximum |
||
|
Equity and equity-related instruments |
80% |
100% |
Very High |
|
Debt and money market instruments |
0% |
20% |
Low to Medium |
|
Foreign Equity and equity-related instruments and overseas ETFs |
0% |
20% |
Very High |
|
Units issued by REITs & InvITs |
0% |
10% |
Very High |
Are there similar mutual funds in the market?
To date, only one asset management company (AMC) has launched such a fund. Samco Mutual Fundannounced the launch of the Samco Active Momentum Fund, an open-ended equity scheme in June 2023.
How will the scheme benchmark its performance?
The scheme’s performance would be benchmarked against the Nifty 500 TRI.
NIFTY 500 TRI represents the top 500 companies based on market capitalization from the eligible universe. The NIFTY 500 TRI represents over 95 per cent of the free float market capitalization of the stocks listed on the NSE. The index is a fair representation of the indicative universe of the portfolio of the Scheme. In view of the same, the performance of the scheme will be benchmarked with NIFTY 500 TRI. The Trustee/AMC reserves the right to change the benchmark for the evaluation of the performance of the scheme from time to time, keeping in mind the investment objective of the Scheme and the appropriateness of the benchmark, subject to SEBI guidelines and other prevalent guidelines.
Are there any entry or exit loads to this scheme?
This scheme involves no “Entry Load”, which means that investors do not have to pay anything to park their earnings in this scheme.
The “Exit Load” would be charged as per the following:
– For redemptions/switch-outs (including SIP/STP) within 15 days from the date of allotment of units, irrespective of the amount of investment: 1%
Who will manage this scheme?
The fund will be managed by Sandeep Tandon, Ankit Pande, Sanjeev Sharma and Vasav Sahgal.
Does the fund contain any inherent risk?
The scheme involves “Very High Risk” as per the details mentioned in the Scheme Information Document and is best suited to investors willing to understand that their principal will be subject to very high risk only. However, investors should consult their financial advisors if they doubt whether the product is suitable for them.
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Updated: 01 Nov 2023, 04:44 PM IST