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Subbu's Solutions is back!!

Posted On Thursday, Mar 30, 2017

Subbu is back! Mr. I.V. Subramaniam (Subbu), Director, Quantum Asset Management Co Pvt Ltd. is pleased to answer investment related queries. Once again, read on to know his views on some interesting queries posted recently...

  • Q1) Which one of the investment style is good for better returns i.e., investing directly into a particular midcap stock or midcap fund?

    Investing in one stock always is always riskier than investing in a bunch of stocks. We would never advise you to put all your eggs in a single basket, but diversify using Mutual Funds. Investing in a mutual fund will earn you the benefit of a fund manager's expert financial knowledge. A good fund manager is one who will invest in stocks after thorough research and at when stocks are at attractive valuations. You benefit by spreading risk across several stocks instead of investing directly in a single stock which may or may not give you the expected returns.
    As an investor, you would need to devote time and energy to read and understand balance sheets of the company that you are investing in. The time and energy required is higher if you trying to build a portfolio of stocks instead of a single stock. Those investors who have the patience to understand the fundamentals of investing directly in stocks of a company may adopt this path. Else we recommend that every Indian saver should consider Mutual Funds as investment vehicles in which to invest their savings.

  • Q2)What is long term when it comes to investments in mutual funds?

    I would say invest forever! Investing in equities can be for your lifetime, but you can always reduce or increase your exposure to equities depending on your risk appetite and need for returns to achieve your goals. The smart thing for an investor is to invest in an equity fund for the long term rather than looking at a shorter time frame, which may be risky.
    However, from an educational point of view, you need to examine the various holding periods over the years for equities, the shorter your grips on equities, chances are that you may land up with losses. It is a challenge to second-guess the markets; even the best of experts often have trouble. Therefore it is the best to hold on to equities assuming a five to ten year horizon.

  • Q3) Your view on interest rate difference between US and India and its impact on Indian markets?

    If the Fed continues to increase interest rates in the US, then those markets become more 'attractive' as US investors will be encouraged to invest in them. FII money could flow out of India and other emerging market economics. From a flow perspective, the impact on India could be negative if interest rates in US keep rising.

  • Q4) Retirement planning - how does one go about it?

    The basic question you need to ask yourself is when you plan to retire.
    The next step is to keep a very close watch on what is lightening your wallet and by how much - your costs. Find out what your current expenses are and subsequently find out what will be your expenses could amount to by the time you retire, assuming a realistic rate of inflation.
    Step 3 is therefore to invest your savings in vehicles that will offer you returns that will beat inflation and leave some money in your pocket to spend. Thus, assuming that rate of return that you require to achieve this expense that you have calculated for post-retirement period, you can work out the total pool required.
    Once you know the pool required you can look at the time horizon, risk appetite and existing asset allocation and then plan your future savings and asset allocation to achieve this goal. At times you may find that your savings are less in which case you may have to tweak your retirement goals. Click Here to go to our Retirement Calculator, which will give you a basic idea of what you need to do.
    Remember, in addition to retirement goals, your savings will also have to be invested for other goals such as your child’s education, marriage etc. The above is a very brief explanation to plan for retirement. You can consult your financial advisor for further details. You can also visit websites like https://www.personalfn.com/ to understand this better.

  • Q5) Will Quantum long term/tax saving fund increase its mid/small cap allocation or this fund has now become pure large cap fund?

    It doesn't matter whether the stock is a large-cap, mid-cap or small-cap. Stock has to be under active coverage with an average daily trading volume of US$ 1 million or above over the last one year. We have, in the past invested in stocks that had lower market cap but was very liquid. So there is no restriction on market cap. The only criterion is that the stock has to be liquid and meet our valuation and other management criteria. Therefore irrespective of market cap, if the stock looks good in both quantitative and as importantly qualitative aspects (like a strong management, orientation towards small shareholders etc.) then it will find its way into our consideration set. At Quantum, we believe in doing what is right for the investor and not deviating from our core investment philosophy that values honesty, transparency and performance. Our investment criteria value the business of the company, the environment in which it operates the management and their long-term goals. (Click here to know more about The Quantum Philosophy)

  • Q6) Should MF investments be reviewed regularly?

    Mutual funds need not be reviewed regularly. A review is required at least annually and whenever your financial situation changes. Changes in financial situation such as birth in the family or inheritance may warrant a revisit of your financial plan. You also need to keep an eye on the mutual funds that you invested in- not necessarily from its performance point of view, but from the perspective of checking if the fund manager or fund house is following its strategy as depicted in its prospectus. If you find that a value manager is following a growth strategy or if the fund manager or research staff turnover is very high, then you may need to review the mutual fund that you are invested in. You may read an article we had written earlier on this subject, which tells you to Avoid frequent visits to your portfolio.

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.

Investors understand that their principal will be at Moderately High Risk
Quantum Tax Saving Fund

(An Open-ended Equity Linked Savings Scheme)
•Long term capital appreciation

• Investments in equity and equity related securities of companies in S&P BSE 200 index and to save tax u/s 80 C of the Income Tax Act. Investments in this product are subject to a lock-in period of 3 years

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


Disclaimer:

Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

Risk Factors: 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 scheme's objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks 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 (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

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