Indians have long preferred Bank deposits due to the safety of capital and assured interest rates. But in the light of record low interest rates, and considering that the return from Bank FDs has trailed behind the cost of inflation - it makes FD investments a losing proposition from a return perspective. This coupled with the spate of recent banking crisis due to the rising NPAs (Non-performing Assets) makes you wonder – is the rate of return that you are getting from your FD indicative of the true risk?
Illustration 1: How Efficient is India’s Preferred Saving Instrument
If you are looking for an option to potentially earn better inflation-adjusted & tax efficient returns while having access to your money anytime, we have an option for you - The Quantum Multi Asset Fund of Funds (QMAFOF).
Here are five points to consider when compared to FDs.
1. Potential to Earn Higher returns than FDs!
The QMAFOF is designed specifically as an option for those investors who have parked their money in a 3-year Fixed Deposit. Since its launch in 2009, the Quantum Multi Asset Fund of Funds (QMAFOF) has generated of return of 9.65% - more than the typical rate of return of a 3-year Fixed Deposit.
In fact, if an investor would have kept an investment in the Quantum Multi Asset Fund of Funds, he/she would have potentially earned a higher return than an FD 86% of the times on rolling return basis*.
Please refer to the table below for the 3-year rolling return of our fund versus an FD. This means that on any given day for the period mentioned in the table below if you are invested for more than three years and chose to withdraw or redeem money from your QMAFOF versus a 3 year FD, 86% of the times you would have a probability of getting higher returns than a 3 years rolling FD return. The returns vary because your money in the Quantum Multi Asset Fund of Funds is always invested in a basket of diversified schemes in the Quantum family, offering a mix of equity, fixed income and gold.
*Past Performance may or may not be sustained in Future. Returns to be read in conjunction with complete performance below
Illustration 2: 3 Year Rolling Returns of QMAFOF vs Bank FD
|% of outperformance
Data as of Sept 30, 2021
The graph and table above has to be read in conjunction with performance of the scheme provided in the table below. Past Performance may or may not be sustained in Future.
Past performance may or may not be sustained in the future. Load is not taken into consideration in scheme returns calculation.
Data as of September 30, 2021
Different Plans shall have a different expense structure.
Returns are net of total expenses and are calculated on the basis of Compounded Annualized Growth Rate (CAGR).
# Indicates CRISIL Composite Bond Fund Index (20%) + CRISIL Liquid Fund Index (25%) + S&P BSE SENSEX TRI (40%) + Domestic price of Gold (15%). The benchmark of the scheme has been changed w.e.f. April 01, 2021. Earlier benchmark was CRISIL Composite Bond Fund Index (40%) + S&P BSE SENSEX Total Return Index (40%) + Domestic price of Gold (20%). It is a customized index and it is rebalanced daily. The fund is managed by Mr. Chirag Mehta and Mr. Nilesh Shetty. For performance of other Schemes managed by them please click here
2. Money When You Need
You can withdraw your money from your investment as and when you require similar to Fixed Deposits. Your money will be credited to your bank account within 3 business days from the date of redemption request.
3. One Fund, Three Asset Classes
Heard the saying, “Don’t keep all your eggs in one basket”. With QMAFOF, you get a readymade diversified portfolio of Equity, Debt, and Gold. Quantum Multi Asset Fund uses a strategic approach to give you multiple scheme benefits by investing in a single scheme. It is a dynamic portfolio that is built to address the concern that any year it is difficult to pick the winning asset class; it is a futile exercise.
At the onset of Covid, markets fell by over 40% in just one month. After the 2008 crisis, markets fell by 55% in few months. So you don’t know when that trigger will come, which leads to the volatility in equity markets.
Each asset has a specific role to play in your portfolio.
While Equity mutual funds offer potential to build wealth over the long term, Debt fund adds to the stability and liquidity. While the presence of Gold adds a risk-reducing, portfolio diversifying benefit. The negative correlation between these assets classes & regular rebalancing of the portfolio will ensure investment balance and minimize the impact of losses driven by falling markets.
4. Tax-efficient Returns with Indexation benefit
You get the potential to save tax efficiently when you invest in the Quantum Multi Asset Fund of Funds than parking your money in FDs for the duration of 3 years and above. This is because, unlike fixed deposit returns taxed as per your income tax slab, the long term capital gains from your Quantum Multi Asset Fund of Funds is taxed at 20% with the benefits of indexation. This translates to a better return on investment, especially for investors in the highest income tax bracket.
Let’s understand the indexation benefit with an illustration. Suppose you had invested Rs. 10,000 since inception in QMAFOF and redeemed your investment in Sept 30, 2021. Unlike Fixed Deposits, you have to pay capital gains tax only on redemption, translating to better post tax return with indexation benefit.
Illustration 3: Indexation Benefit Table
Past performance may not be sustained in the future. The above table is for illustration purposes only to explain the benefit of indexation.
5. Cope better with inflation
Inflation can drastically curtail the real return from the fixed deposit, thereby capping your wealth creation goals. On the other hand, the equity component in Quantum Multi Asset Fund of Funds gives your investments the potential to grow over the long term and are better positioned to earn returns greater than the prevailing rate of inflation.
In conclusion, you need to diversify your investments across asset classes to allow your investments to grow over the time. Here’s a snapshot of how QMAFOF compares to an FD in the table below:
Illustration 4: How Does QMAFOF Compare
If you are looking for a sensible option for your bank FDs, you can invest in the Quantum Multi-Asset Fund of Funds where your portfolio is adequately rebalanced from time to time in the three asset classes of Equity, Debt and Gold.
Instead of losing sleep contemplating how safe your Fixed Deposits will be, you could consider investing in the Quantum Multi Asset Fund of Funds.
Flexible. Dependable. Diversified.
Note: The comparison with Fixed Deposits has been given for the purpose of the general information only and not a recommendation to invest. Investments in Quantum Multi Asset Fund of Funds / mutual funds should not be construed as a promise, guarantee on or a forecast of any minimum returns. Unlike fixed deposit with Banks there is no capital protection guarantee or assurance of any return in Quantum Multi Asset Fund of Funds / mutual funds investment. Investment in Quantum Multi Asset Fund of Funds as compared to Fixed Deposits carry moderately high risk, different tax treatment and subject to market risk and any investment decision needs to be taken only after consulting the Tax Consultant or Financial Advisor
Unlock Potential to Earn Better Returns than Your FDs - With This Investment Option
Multi Asset Funds To The Rescue...
Balance Your Mutual Fund Investment to Minimize Downside Risk
Watch our recent webinar where QMAFOF Fund Manager Chirag Mehta takes you through the different hybrid funds and which of these efficiently compare to an FD.
|Name of the Scheme & Primary Benchmark
|This product is suitable for investors who are seeking*
|Risk-o-meter of Scheme
|Risk-o-meter of Benchmark as of Sept 30, 2021
|Quantum Multi Asset Fund of Funds
An Open Ended Fund of Funds Scheme Investing in schemes of Quantum Mutual Fund
Primary Benchmark: CRISIL Composite Bond Fund Index (20%) + S&P BSE Total Return Index (40%) + CRISIL Liquid Index(25%) + Domestic Price of Gold (15%)
|• Long term capital appreciation and current income
• Investments in portfolio of schemes of Quantum Mutual Fund whose underlying investments are in equity , debt / money market instruments and gold
Investors understand that their principal will be at Moderate Risk
*Investors should consult their financial advisers if in doubt about whether the product is suitable for them.
The Risk Level of the Scheme in scheme Risk O Meter is basis it's portfolio as on September 30, 2021.
The Risk Level of the Benchmark Index in the Risk O Meter is basis it's constituents as on September 30, 2021.
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.QuantumAMC.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.