Q&A with Mr. Atul Kumar

Posted On Wednesday, Oct 31, 2018


In a recent interview with Unovest, Mr. Atul Kumar, Head – Equity Funds, spoke about the purpose of the Quantum Long Term Equity Value Fund, what investors should expect from the fund and finding opportunities in the current investing environment. Here are the excerpts from the interview.

1. Why does Quantum Long Term Equity Value Fund exist? What’s the purpose?
The objective of Quantum Mutual Fund is to help every investor invest in Indian equities with our solid research process and low cost approach. Quantum Long Term Equity Value Fund (QLTEVF) over the last 10 years have performed across market cycles and aim to generate sensible risk adjusted return over the long term. We follow the value style of investing and the fund is driven by a disciplined approach to valuations. The scheme is not afraid to increase cash levels when markets are overvalued. The fund may appear to follow a conservative approach but we believe that over the long term it has delivered on the mandate.

2. You follow a strict discipline in terms of research and stock picking; does this restrict your investment universe?
We have a liquidity filter of at least $1 million daily trading volume in stocks that we own; apart from that we do not have any market capitalization or sector bias. Companies with weak corporate governance and a history of treating minority shareholders poorly do not come into our portfolio.

3. The fund categorisation along with market cap segmentation for various funds has happened. Is there any change with respect to stock selection strategy or investment universe in your fund? Any other changes you have made?
No change at the broad level, we are keen to invest in companies which have strong corporate governance, capable management teams and not too much debt leverage. And finally, the stock should be available at a reasonable valuation. We have welcomed the Categorization and Rationalization of Mutual Fund Schemes by SEBI as we are and have always been following the value style of investing since our inception in 2006. Our investment philosophy or strategy has not changed since then and will not in the foreseeable future!

4. Too much money is flowing in to the stock markets and there are various kinds of conflicts world over. What are the challenges you expect in the current investing environment? How difficult is it to find opportunities?
Significant increase in share prices over the last few years devoid of any earnings growth made valuations across most companies expensive. Rising global liquidity lowered risk aversion. Downside risks became higher since 2014 when lot of money was chasing stocks. We saw some of our portfolio stocks breaching our sell limits forcing us to sell them raising cash levels in the fund. However, we may just be entering a phase where global liquidity recedes, making valuations a lot more reasonable. Over the long term, we remain optimistic on Indian equities. India is likely to grow faster than many nations.

5. The observation made by some investors is that despite a significant cash holding and a conservative investment approach, the fund tends to fall as much as the market, while it lags in the recovery. How do you explain that? Some specific examples will be helpful.
In recent market fall, we did much better than our benchmark. Traditionally, we have held stocks which are very liquid. When markets fall, people find it easier to sell such stocks than mid/small caps. Later the fund manager will sell small/mid caps after liquid names.
While in the very near term our performance is in line with market, as time passes, quality stands out. We saw that happen in 2008-09 period.

6. Going forward, what should investors expect from the Quantum Long Term Equity Value Fund?
Recently, there has been a reasonable correction in stock prices. Many stocks which looked highly valued now seem to come within reach. We are likely to find new stocks for our portfolio and cash level can fall further. Over the long term, we remain optimistic on Indian equities. India is likely to grow faster than many nations. Investors can expect decent returns from equities over a long period in future. Investors should take advantage of the recent fall in stock markets and put more money. Equities now appear less risky than they were earlier.

Product Labeling

Name of the Scheme & Primary BenchmarkThis 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.
Quantum Long Term Equity Value Fund
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.

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.

Above article is authored by Quantum.

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