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Why Mr. Consistent Should be a Part of Your Team

Posted On Wednesday, Mar 22, 2017

An investor can invest at any time in a mutual fund (though we always say, now is the best time to invest, if you haven't done so already!). The question to ask is, why does someone invest in mutual funds in the first place - the primary answer? To build wealth through market-plus returns.

There is nothing wrong in earning high returns but investors tend to overlook consistency, which should be up there alongside performance in the reasons to select a fund, but seldom does get the prominence it deserves. We devote this article to consistency and how important it is to have a consistent fund in your portfolio.

Imagine a cricket team where you have players who can score centuries by hitting the sixes and fours, but when the going is tough, no one has the ability to knuckle down and score runs when needed. Such a side will do extremely well in the right conditions and against certain opponents, but given a tough ground or opposition they are sure to falter. Similarly, it is important to have a consistent player in your portfolio.

Can someone be Mr. Consistent forever?

Taking the cricket analogy forward, even players with the finest technique cannot be in form all throughout their careers, form will rise and dip - but class remains.

Similarly it is impossible for a fund to be true to label and continue performing irrespective of market cycles; what we mean is that during a market rally small and mid-cap funds tend to rise the most, if the fund does well at that time, then it should NOT do well when the markets fall, in fact if the fund performs at the same level - irrespective of market cycles, then that fund is not being true to label. At Quantum AMC we have believed since our inception that integrity must be maintained not only in the peripheral services provided to investors, but it must start at the core of what we do; managing your investments. So to us integrity also translates to being "true to label", ensuring each of our schemes accurately abide by the investments limits laid down in their Offer Documents. Click here to read more. Therefore consistency in the mutual fund business is not scoring a 100 every single time. It is scoring enough runs to get your team to win irrespective of the conditions.

Measuring consistency

It always tends to happen that, before investing, many investors end up reviewing the returns generated in the past one year of a particular mutual fund scheme. One can never tell the outcome of a fund due to volatility in the markets. It may happen that a fund which has outperformed its benchmark this year may end up underperforming tomorrow. And as stated above this should be the case, so as we look at a batsman's average across years and venues played, we should also look at the fund's batting average (read CAGR returns) across all time periods 1 year, 3 years, 5 years and beyond.

Importance of consistency

Any investor would be happy to reap high rate of returns regularly when investing in a mutual fund of his/her choice. A fund that is constant and reliable ensures that it stays true to its philosophy, has a team-driven, well-defined research and investment process that generates positive results for investors in the long-run. Viewing the funds returns over different periods of time or in different market cycles will tell you if the fund was doing well or not. Further, a funds factsheets displays its returns for three years in sequence along with the relevant benchmark. Investors can check the necessary details in a fund factsheet which is available on the Quantum website (Click here to view the Quantum Factsheet).

Always remember, go for the consistent player, if the pitch is good then the rest of your hitters will score, but if the pitch is bad, then it is he who leads you to victory.

Click here to go through the batting average, oops factsheet! of our Mr. Consistency - the Quantum Long Term Equity Fund.

Product Labeling
Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
Quantum Long Term Equity Fund
(An Open-ended Equity Scheme)
• Long term capital appreciation and current income

• Investments in equity and equity related securities of companies in S&P BSE 200 index.

Moderately High – Investors understand that their principal will be at Moderately High Risk

* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

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. 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.

Mutual fund investments are subject to market risks read all scheme related documents carefully.

Please visit – 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.

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Mutual Fund investments are subject to market risks, read all scheme related documents carefully.