As you can see from the above, the diversified funds have done better than the ELSS. It is not necessary that ELSS give more returns than a normal mutual fund. However since the fund has a three year lock-in period, there is less redemption pressure in the case of an ELSS as compared to a normal mutual fund. This results in less amount of trading to meet redemption requirement and means less re-investment risk. The above factors may keep the volatility of the NAV low, but the performance will depend entirely on the stocks invested. Everything else remaining same between two funds, the returns of a fund with lower trading expenses will be better.
At Quantum Mutual Fund, the investment strategy for Quantum Long Term Equity Fund and Quantum Tax Saving Fund is the same. We believe in building a portfolio of stocks, which meet our investment criteria, and holding them for a longer term. Hence, if you have already exhausted your 80C limits then you can invest in Quantum Long Term Equity Fund rather than Quantum Tax Saving Fund. However while the Quantum Long Term Equity Fund does not have a lock-in period, the fund is meant for long term investors who wish to hold on to their investments for at least 3 years.
2. Is Quantum Asset Management planning to come up with a mid-cap dedicated fund in addition to the schemes already in existence? – Ajay Maheshwari
Dear Ajay,
We do intend to launch a mid cap dedicated fund, but this is not an immediate priority.
However, the Quantum Long Term Equity Fund is a multi cap fund which can give you an exposure to large cap as well as mid cap stocks.
3. With regards to the new mutual fund trading platforms, will they list all the funds available? – Sri
Dear Sri,
First of all, ‘listing’ would be an incorrect word to use in relation to the mutual fund trading platforms.
The new mutual fund trading platform is actually an order routing mechanism. It is upto each asset management company to decide which of the schemes should be allowed to be routed through the exchange trading platform. So, if all AMCs decide to allow all their schemes to be routed through this platform then all the schemes will be available through the NSE MFSS and BSE Star MF.
4. How does the Nifty ETF work? – Asli Mumbaikar
The Nifty ETF is an Exchange Traded Fund which represents a portfolio of stocks that is a replica of stocks in the Nifty.
For an example: if the following are the stocks in the Nifty in the following proportions, then the Nifty ETF would also have the same stocks in the same proportions.
| STOCK 1 | 5% |
| STOCK 2 | 5% |
| STOCK 3 | 4% |
| STOCK 4 | 2% |
| STOCK 5 | 2% |
| STOCK 6 | 2% |
| STOCK 7 | 2% |
| STOCK 8 | 2% |
| STOCK 9 | 2% |
| STOCK 10 | 2% |
| STOCK 11 | 2% |
| STOCK 12 | 2% |
| STOCK 13 | 2% |
| STOCK 14 | 2% |
| STOCK 15 | 2% |
| STOCK 16 | 2% |
| STOCK 17 | 2% |
| STOCK 18 | 2% |
| STOCK 19 | 2% |
| STOCK 20 | 2% |
| STOCK 21 | 2% |
| STOCK 22 | 2% |
| STOCK 23 | 2% |
| STOCK 24 | 2% |
| STOCK 25 | 2% |
| STOCK 26 | 2% |
| STOCK 27 | 2% |
| STOCK 28 | 2% |
| STOCK 29 | 2% |
| STOCK 30 | 2% |
| STOCK 31 | 2% |
| STOCK 32 | 2% |
| STOCK 33 | 2% |
| STOCK 34 | 2% |
| STOCK 35 | 2% |
| STOCK 36 | 2% |
| STOCK 37 | 2% |
| STOCK 38 | 2% |
| STOCK 39 | 2% |
| STOCK 40 | 2% |
| STOCK 41 | 2% |
| STOCK 42 | 2% |
| STOCK 43 | 1% |
| STOCK 44 | 1% |
| STOCK 45 | 1% |
| STOCK 46 | 1% |
| STOCK 47 | 1% |
| STOCK 48 | 1% |
| STOCK 49 | 1% |
| STOCK 50 | 1% |
| TOTAL | 100 |
However, there could be minor differences between the portfolio and the Nifty stocks for the following reasons:
a) Dividends received
b) Expenses incurred
c) Inflow and outflow from the fund
The three points mentioned above can result in some cash build-up in the portfolio which may result in the returns being different in comparison with the Nifty. Additionally at times due to large inflow into the fund, some stocks may not be available in adequate volumes resulting in weights being different than the Nifty, again inferring different returns of the portfolio in comparison with the Nifty.
The below diagram explains the working of the Nifty ETF. (Also called the Quantum Index Fund)
ETFs are popular because they follow a passive strategy that simply mirrors the index. The investor need not worry about the fund manager or the strategy of the fund manager. Also, the expenses of an ETF are usually lower than that of an active fund.
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Disclaimer: The responses mentioned here are strictly for illustration purposes, and are not to be considered or implemented as recommendations.