Navigation

Subbu's Solution

Subbu Answers Your Investment Queries

Mr. I.V. Subramaniam (Subbu), Director, Quantum Asset Management Co. Pvt. Ltd. is pleased to answer investment related queries. Once again, read on to know his views on some interesting queries posted recently...

Q. The S&P BSE Sensex has breached an all-time high of 39,000 today. I am really excited and want to invest. Please share some stock tips Subbu! - Deepali

While it's great that you've decided to actually start investing, but sorry to dampen your enthusiasm! Though markets have breached an all-time high today, our answer, however, stays the same. Ignore the market levels and remain invested till the time your financial goals are achieved. Whatever the market levels are, stick with your long-term plan. Markets, as is their nature will attain new highs or may enter into correction mode (may fall). Don't get too excited about the gains you've already experienced, and you won't be too disappointed when that point in the future is a reality where gains are a little harder to come by. So if you have a financial plan, stick to it irrespective of market levels.

To know what your asset allocation is based on your risk profile, click here.

Q. Why does Quantum look at social and economic parameters and not stick only to company information? - Rahul

Good question Rahul. There is always something happening in society, issues that affect society in some way or the other which are dear to some and not so dear to others. Based on those issues, leaders are elected. Those leaders in turn will create policies which will either help society or help them resolve those issues. Once leaders create those policies, it will have an impact on sectors which will then have an impact on management of a company e.g. If government bans smoking in public, tobacco companies may get affected. This can be best explained by way of an illustration below.


Investments are a part of many things in the world and investors need to be aware of the various events happening that can influence the environment in which companies will operate. There are many ways to figure out the outermost circle of what Society wants and how that could impact Politics and the eventual Policy that influences what is likely to happen in any economy. A company in a great business sector but with poor management may not be good for your portfolio returns! A good management can work hard and build a great business even when it is surrounded by bad policy and unethical competitors. While the 'Management of a Company' is the smallest circle in terms of size in the chart above, it deserves the most attention. But never ignore the larger circles which can have a significant impact on the fortunes of a company and, therefore, the potential long term value of the underlying business and its long term share price.

So, yes. Quantum Mutual Fund looks at the social and economic factors apart from the fundamentals.

Q. Elections are around the corner and I am wondering where to put in my money... any advice for me? - Priyanka

A. Elections don't matter for your investments in the long run. The results do matter - but only in the near term. Analysis by Quantum Mutual Fund shows that talking about election results is a great conversation starter but elections have no impact on your long term investments! The heat and dust which encompasses the campaigning season and then dies down is a reason for our conviction that elections do not matter to your investments. That is summarized by this powerful chart:


Data Source: RBI.org
Data Compilation: Quantum
Past Performance may or may not be sustained in future


This chart shows that across 39 years, 10 governments and 6 coalitions, the Indian stock markets (BSE-30 Index) have grown by a whopping 305 times. India's GDP has grown by 6.3% irrespective of whoever has been in power. Therefore, Quantum believes that there is no impact of elections on your investments whatsoever.

But, in case you are still worried, while nothing changes for us at Quantum, we do realize that these elections could be one of the most closely fought in recent times - and the election results may have an immediate impact on the stock markets.

Date When Election Results Were DeclaredOutcome of National Polls S&P BSE Sensex (in INR)
Market Reaction 2 Years (Annualized Return)
16-May-2014
BJP-led coalition wins a majority
0.9%
4.7%
18-May-2009
Incumbent Congress-led UPA government gets a shock majority win
17.3%
14.1%
17-May-2004
Incumbent BJP-led coalition has a shock defeat
-11.1%
67.8%
Data Source: Bloomberg
Data Compilation: Quantum
Past Performance may or may not be sustained in future

As you can see in the table above, markets react in the short term, however in the long term, returns are greater.

So, for those who wish to worry about something, Quantum is offering you a simple solution to rejig your portfolio based on who you think will win the next elections:

• Scenario 1 - If you believe that a BJP-led coalition will come to power;
• Scenario 2 - If you believe that a Congress-led coalition will come to power;
• Scenario 3 - If you believe that a Mahaghatbandhan-led coalition will come to power;
Your Expected OutcomeEquitiesGoldLiquid Grand Total
Quantum Long Term Equity Value FundQuantum Equity Fund of Funds Total (Equities)Quantum Gold Savings Fund Quantum Liquid Fund  
Option A: BJP Led Coalition
10%
65%
75%
15%
10%
100%
Option B: Congress Led Coalition10%60%70%20%10%100%
Option B: 3rd Front or Mahaghatbandhan10%40%50%30%20%100%

The above investment allocation is not to be considered as an Investment advised / recommendation. Please seek independent professional advice based on your financial needs and your financial situation and arrive at an informed investment decision before making any investments in any mutual fund or when making a decision on investment diversification or asset allocation.

Given the past data and our analysis of the impact of elections and governments on the growth rate of the Indian economy, Quantum firmly believes that elections do not matter when it comes to investing in stock markets. However if election results do worry you and you are wondering how to allocate your investments then Quantum has a one click solution for that too. So go ahead and make your allocations based on your expected outcome, you can curl up in front of your favourite noisy TV channel and watch the election tamasha!

Yes, Subbu, I believe that the BJP-led coalition will win so let me buy your suggested basket of mutual funds in one easy click.

Yes, Subbu, I believe that the Congress-led coalition will win so let me buy your suggested basket of mutual funds in one easy click.

Yes, Subbu, I believe that the Mahaghatbandhan-led coalition will win so let me buy your suggested basket of mutual funds in one easy click.


Product Labeling
Name of the SchemeThis product is suitable for investors who are seeking*Riskometer
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 Fund
Investors understand that their principal will be at Moderately High Risk
Quantum Equity Fund of Funds

(An Open Ended Fund of Funds scheme Investing in Open Ended Diversified Equity Schemes of Mutual Funds)
• Long term capital appreciation

• Investments in portfolio of open-ended diversified equity schemes of mutual funds registered with SEBI whose underlying investments are in equity and equity related securities of diversified companies
Quantum Gold Savings Fund

(An Open Ended Fund of Fund Scheme Investing in Quantum Gold Fund)
• Long term returns

• IInvestments in units of Quantum Gold Fund - Exchange Traded Fund whose underlying investments are in physical gold
Quantum Liquid Fund

(An Open Ended Liquid Scheme)
• Income over the short term

• Investments in debt / money market instruments
Quantum Long Term Equity Fund
Investors understand that their principal will be at Low Risk
* Investors should consult their financial advisers if in doubt about whether the product is suitable for them.

Disclaimer:

Subbu's Solution is authored by I. V. Subramaniam. I. V. Subramaniam is a director of Quantum Asset Management Company Private Limited. The responses expressed here are strictly for information and explanation purpose only. The responses are meant for general reading purpose and not to be considered as an investment advice / recommendation. The responses are not intended to be an offer or solicitation for the purchase or sale of any financial product or instrument or units of the Mutual Fund. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investments. The Sponsor, The Investment Manager, The Trustee, their respective directors, employees, affiliates or representatives shall not be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the information contained in the responses.

Risk Factors: 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 scheme's objective will be achieved and the NAV of the scheme(s) may go up or down depending upon the factors and forces affecting securities markets. Investment in mutual fund units involves investment risks 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 (AMC). The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956.

1800-209-3863 /1800-22-3863

022 6829 3807

www.QuantumMF.com