A Potential Benchmark For Your Equity Mutual Fund Portfolio

Posted On Wednesday, Aug 01, 2018


Benchmarking Begins at Home

Since childhood, consciously or not, we have always benchmarked ourselves to others and see how we compare. Our first benchmarks are of course our parents and as we grow older they become sports stars or actors, whose looks and styles of play we try to imitate. Even our parents weren’t immune to it, in school there is always that kid who we were compared to stands first in class or was good at batting – or the neighbor’s kid who happens to be in the same school… we were all ‘victims’ of benchmarking once. ☺

Benchmarking, like life, gets serious as we get older. We benchmark salaries and designations, milestones we want to achieve as we grow up the corporate ladder. The business Dictionary defines Benchmarking as “A measurement of the quality of an organization's policies, products, programs, strategies, etc., and their comparison with standard measurements, or similar measurements of its peers.” As individuals and even as teams or organizations there is always a benchmark against whom we like to compete with and measure our performance against. They become the reason to dream and the reason to wake every morning and work that much harder to achieve the goal. All of us would like to firstly to meet and eventually surpass that benchmark.

Getting Benchmarking Right

Similarly, when it comes to your portfolio you need a benchmark to see if you portfolio is meeting this benchmark, or beating it, or is yet to scale up returns to meet it. It is very important therefore to have the right benchmark for your portfolio.

Benchmarking a diversified equity portfolio (we assume here that you have done your risk profiling and invested accordingly) against a sector fund or a small cap fund will yield tremendous euphoria when markets are down (as the “benchmark” will sink faster than the market) or great sorrow (as the “benchmark” will rise faster than the market, beating your portfolio). Similarly benchmarking a diversified equity portfolio against your FD could generally make you happy , as the benchmark you have set is the one that could easily be beaten in terms of returns.

Benchmarking your Equity Portfolio

Your equity portfolio will be (or should be) a judicious mix of direct stocks that you may have purchased and equity mutual funds, which in turn invest in stocks listed on the exchanges. Therefore what is the ideal benchmark for a diversified equity portfolio? Is it the SENSEX? Or the NIFTY? While these are not bad options to benchmark your portfolio against, but you as you know that the SENSEX and the NIFTY are averages of the top 30 and 50 stocks respectively – mostly large caps. What you need is a well rounded benchmark that covers not only the large caps, but also the mid and small cap stocks. A benchmark not restricted to 30 or 50 stocks but has more than 250 stocks!

Let us introduce Quantum Equity Fund of Funds or QEFOF as one of the benchmarks for your equity portfolio!

The Quantum Equity Fund of Funds is a fund that invests in 5-10 selected diversified equity schemes available for investors, other than Quantum. The funds that form a part of the QEFOF portfolio are shortlisted after going through the stringent shortlisting process, thus creating a well- rounded basket of diversified equity schemes across categories.

The funds that form a part of the QEFOF portfolio are actively managed funds whose aim is to beat their respective benchmarks, hence giving you a suite of some of the best selected mutual funds . When you compare your portfolio to QEFOF, there are 3 scenarios that could emerge:

ScenarioYour Portfolio ReturnsWhat You Should Do
The Best ☺☺☺Are better than QEFOF in terms of returns over a 5 year periodNothing.
Congratulations, you are already an accomplished investor, keep investing as you are with a long term goal in your mind. However keep an eye on QEFOF, we may just surprise you!
The Good ☺☺Are in line with QEFOF in terms of returns over a 5 year periodThink about the equity portfolio you have built and the time & trouble you take to keep it in line. Your efforts to review and if needed change the funds regularly. So, with just the one fund we take care of all that for you and all you have to do is look at one account statement!
The Not So Good ☺Are below QEFOF in terms of returns over a 5 year periodSwitch over! Start investing in QEFoF (Hyperlink to Invest Online) or give us a call or write to us and we are happy to help you know more about the fund.

We would like to know did you beat the new benchmark, simply reply to this email.

Your Benchmark’s Performance

Given below is the performance of the Quantum Equity Fund of Funds. Know that you can always reach out to us on 1800-22-3863 or write to us at [email protected] for details.

To know more about Quantum Equity Fund of Funds, click here
To invest online in Quantum Equity Fund of Funds, click here

Product Labeling

Name of the Scheme & Primary BenchmarkThis product is suitable for investors who are seeking*Risk-o-meter of Scheme
Quantum Equity Fund of Funds

An Open Ended Fund of Funds scheme Investing in Open Ended Diversified Equity Schemes of Mutual Funds
• Long term capital appreciation

• Investments in portfolio of open-ended diversified equity schemes of mutual funds registered with SEBI whose underlying investments are in equity and equity related securities of diversified companies
Quantum Equity Fund of Funds
Investors understand that their principal will be at Very 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 / video 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. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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