Quantum Liquid Fund: Navigating Credit Risk with Expertise and Precision

Given the recent instances of credit defaults in debt funds, we have been receiving queries from investors as to whether Quantum Liquid Fund also has exposure to such entities which have seen erosion in market value or which have defaulted.

Over the last few months, we have been communicating about the investment philosophy of Quantum Liquid Fund. This article is a continuation of our investor education efforts on the positioning of Quantum Liquid Fund and making investors aware of investing in debt funds in general.

Right from its inception, Quantum Liquid Fund (QLF) had an offer document driven mandate of investing 80% of its assets in the highest quality instruments. Over time, as we learnt from various liquidity and macro-economic shocks, especially of 2007-08 and 2012-2013, we have tightened our investment mandate.

We follow the SLR investment philosophy (Safety, Liquidity and Returns) for managing the fixed income funds at Quantum.

We realized that achieving all three - high safety, high liquidity and high returns is not easy.

The investment objective of a liquid fund is to keep your investment safe and liquid and try and achieve slightly higher returns than bank savings deposits.

Thus, liquid funds' portfolios should have very high liquidity, minimum volatility and near zero chances of capital loss (credit risk - risk of default of interest and principal).

Quantum Liquid Fund prioritizes Safety and Liquidity over Returns.

Although Quantum Liquid Fund is allowed to invest in corporate debt as per the offer document but as per the current internal investment policy, it has not invested in any Private Corporate Debt.

Thus debt instruments of companies mentioned in recent media articles which have defaulted or are reportedly under stress may not make it to the portfolios of Quantum Liquid Fund or Quantum Dynamic Bond Fund.

QLF has no investments in any instruments issued by Private Corporate Sector entities.

The Quantum Liquid Fund now has investments only in Government Securities, Treasury Bills and Commercial Paper/ Certificate of Deposits issued by AAA rated PSU entities (Public Sector Undertakings).

The fund thus hopes to mitigate the issue of credit risks (risk of default) and liquidity risks (unable to liquidate/sell the assets to meet redemptions) by investing in safer and more liquid instruments.

Therefore while the returns that the Quantum Liquid Fund generates may be lower than its peers, the risk that the Fund takes is also lesser.

Quantum Liquid Fund also follows an industry leading practice of completely marking to market (MTM) its entire liquid fund portfolio in keeping with SEBI's mandate of fair valuation of securities. This ensures that the NAV of the fund is more closely linked to the actual realizable market value of the assets.

We disclose our portfolios of Quantum Liquid Fund on a weekly basis enhancing transparency, 

To invest in the Quantum Liquid Fund click the button below!

Name of the Scheme & Primary Benchmark	This product is suitable for investors who are seeking*	Risk-o-meter of Scheme
Quantum Dynamic Bond Fund An Open Ended Dynamic Debt Scheme Investing Across Duration	• Regular income over short to medium term and capital appreciation • Investment in Debt / Money Market Instruments / Government Securities.	Investors understand that their principal will be at Moderate Risk
Quantum Liquid Fund An Open Ended Liquid Scheme	• Income over the short term • Investments in debt / money market instruments.	Investors understand that their principal will be at Low 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. Please visit – www.quantumamc.com/disclaimer to read scheme specific risk factors.

Above article is authored by Quantum.

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