From 248 to 7 - in 5 days!

Posted On Sunday, Jan 01, 1950

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Thankfully, we did not fire the Fund Manager!

And - my good fortune - the Board of Quantum Asset Management Company Private Limited did not fire me.

And - great judgement on your part - investors like you in the Quantum Long Term Equity Fund did not bail out and put their money in some other equity mutual fund.

It is time to celebrate.
And maybe send a garland to the Fund Manager of Quantum Long Term Equity Fund.

The ranking of the Quantum Long Term Equity Fund (for a one week period) surged from 248 (out of 248 diversified equity funds) on October 21st to 7th (out of the same 248 diversified equity funds) on October 28th. (click here to read the previous HT)

Hmm, I thought, I know we did not change a lot in the portfolio.

Does your portfolio have a heart beat?


In fact, the Fund Manager informs me that we did not do a single trade.

Yes, you read that correctly: there was not a single trade done in those 5 working days.

In nearly 28 hours of trading, there were no trades done by the Fund.
Of course, the market was trading and was open.
Over Rs. 550,000 crore worth of trades were done in those 5 trading days.

And not one paisa from Quantum Long Term Equity Fund.

And our ranking for the week surged from 248 to 7.

Table 1: Quantum Long Term Equity Fund surges to a 7th rank for the past one week!


Returns (%)1 Week Ended October 28, 20091 Month Ended October 28, 2009
Quantum Long Term Equity Fund-2.11+0.06
Category Average (Equity Diversified)-4.45-1.08
Quantum Long Term Equity Fund Ranking769
Total248248
How many funds have we done better than?97.18%72.18%


(Source - www.valueresearchonline.com) Returns for Growth Plan

But what caused this surge?
Again, someone's perception of the "correct" price of the stocks owned in the portfolio of the Quantum Long Term Equity Fund.
The fact that there were no trades done does not mean that the investment team was sleeping.
Far from it: they continue to monitor the companies and managements of businesses.
They have a pulse.
They have a heart beat.
Their decision to do nothing was a conscious decision.
Nothing significant had happened during that Rs 550,000 crore of hyper-active trading over that 5 day period.


Table 2: QLTEF stocks did better than some others this week!


The Top 10 stocks owned by the FundTheir weight in the portfolio as of September 30, 2009How did they perform between Oct 22 and Oct 28?
HDFC6.20%-0.9%
TCS5.93%1.4%
Infosys5.55%4.2%
HDFC Bank5.30%-2.4%
Hind UniLever4.48%1.7%
ONGC4.40%-3.8%
Bajaj Auto4.38%-2.7%
Container Corp4.04%-3.9%
Zee4.03%-1.3%
BPCL4.01%-4.7%
BSE-30 Index
-4.3%
Reliance IndNot owned-6.7%
ICICINot owned-12.8%
L&TNot owned-5.1%
UnitechNot owned-18.0%
DLFNot owned-14.6%


Source: Bloomberg, BSE

As we highlighted in the previous Honest Truth for the week ended October 21st, the stocks we owned did not "rise" in price.
The stocks we did not own, did a lot better.

So, we suffered.
For that one week.

And now we have done better.
Much better.


A repeat lesson for all of us


The way stocks are researched for the portfolio of the Quantum Long Term Equity Fund has not changed.
The way stocks are picked for the portfolio of the Quantum Long Term Equity Fund has not changed.

But the way the markets price the stocks we own changes every minute!
The last time we checked, the managements of the companies we own still run the way they ran their businesses last week - or last month.

But, on some days, the stock markets love the share prices of certain companies.
And on some days it loves some other stocks!

This similar portfolio gave the Quantum Long Term Equity Fund a pretty good track record for the 1-year, 2-year, and 3-year time periods ended October 28, 2009.

Table 3: Read our Offer Document carefully to decide where to park your savings for the long term


Quantum Long Term Equity Fund - Performance Data
Returns (%)3 Month Ended6 Month Ended1 Year Ended2 Year Ended3 Year Ended
Returns upto 1 year are absolute and over 1 year are annualised.As on October 28, 2009
Quantum Long Term Equity Fund13.4565.67101.203.5713.18
Category Average (Equity Diversified)8.7055.8188.79-7.228.45
Quantum Long Term Equity Fund Ranking2849471033
Total236221210186156
How many funds have we done better than?88.14%77.83%77.62%94.62%78.85%
Quantum Long Term Equity Fund was launched in March 2006

Source: www.valueresearchonline.com


So, markets bounce.
Share prices jump all over the place.
But the investment thesis for us to own stocks in the Quantum Long Term Equity Fund has not changed.

The ranking numbers are - like the clouds - passing in nature.

Rankings do not change what we do.
Click Here to learn more about the 'Quantum way'.

I am delighted that the majority of you refused to give us the permission to fire our fund managers or the research analysts: they are really good people and very disciplined in what they do.

Rankings did not rattle you.

Just as it does not rattle the investment team at Quantum Mutual Fund.

Assessing and pricing risk does.
And generating returns over longer periods of time.

They avoided stocks like Reliance, ICICI, L&T, DLF, and Unitech because the risk-return reward was not attractive - or the managements are totally avoidable.

We let others boast about their rankings and their stars and "returns".
We focus on risk we wish to take and the return we wish to be rewarded for the risk we have agreed to take.

The Fund manager and their research team that looks after your savings in the Quantum Long Term Equity Fund is good - as is the process - the times are strange.

The waqt for the week ended October 28th was good for our rankings.

The next Rs 550,000 crore of trading may change our ranking again.
Who knows!

And my appeal to you remains: if you wish to make sensible long term returns - and don't get rattled by this 248/248 of the previous week or the 7/248 ranking for one week (just as we are not) - click here and start investing in Quantum Long Term Equity Fund.


Note: This article was first carried on www.equitymaster.com

Above article is authored by Quantum.

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