Fast Five with Nilesh Shetty

Just five questions Mr. Nilesh Shetty, Associate Fund Manager, Equity to help guide investors in approaching investments during the recent market boom. He lets us know what kind of stocks make the cut in Quantum Long Term Equity Fund’s portfolio.

1. Equity markets are already up substantially, so is there much more room to grow? How are you approaching the market right now?
Earnings growth has not reflected the sharp rise in share prices, so the result has been significantly expanded PE multiples. Even when we factor in an earnings recovery, valuations look expensive. Our sense is downside risks are presently high and investors need to be cautious. Markets can continue to rally based on flows, but that would only further elevate downside risks. We have seen some of our portfolio stocks breaching our sell limits, which has forced us to sell them and raise cash levels in the fund. We continue to focus on the basics like meeting companies and visiting suppliers and customers to ensure we do not miss anything in our research.

2. What is your investment space? Any company-specific traits which help make a stock part of your portfolio?
We have a liquidity filter of at least $1 mn daily trading volume in the stocks that we own; apart from that we do not have any market capitalization or sector bias. We have a predetermined Buy and Sell limit for each stock actively covered by our research team. The limits are decided based on sustainable cash flow generating ability of a company and its long term valuation bands. Once a stock hits our buy limit it finds its way into our portfolio and once it hits our sell limit it exits our portfolio.

3. What kind of stocks do you avoid?
Companies with weak corporate governance and a history of treating minority shareholders poorly do not come into our portfolio.

4. Which are the sectors that you would bet on at this point of time and why?
We are seeing some value emerging in Pharma stocks and Information technology stocks. These are good companies with great managements facing some near term headwinds that have hit their share prices, so these stocks may prove to be winners in the next five years as those issues hopefully get ironed out.

5. What is your advice to investors?
We remain positive on Indian equities over the long term. However, we are cautious in the near term. Markets have seen a significant rally not supported by earnings growth, so the only conclusion we can reach is that sustainable upside in Indian equities is limited in the near term. That mentality is reflected by the high cash levels held in our schemes. We suggest that investors who are looking to make a lump sum investment should stagger their investments, though SIP investors do not need to change their investment allocation plan.

Name of the Scheme & Primary Benchmark	This product is suitable for investors who are seeking*	Risk-o-meter of Scheme
Quantum Long Term Equity Value Fund An Open Ended Equity Scheme following a Value Investment Strategy	• Long term capital appreciation • Invests primarily in equity and equity related securities of companies in S&P BSE 200 index.	Investors understand that their principal will be at Moderate Risk

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.

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 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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