quant mutual fund: Volatility indices will stay high for a long time, says Sandeep Tandon of Quant Mutual Fund
Many investors and advisors wonder why you converted your consumer fund to flexi cap. Why didn’t you launch a new flexi cap fund?
I would like to answer your question in two parts. First, when SEBI introduced a new category called Flexi Cap, we did not convert any of our existing programs into this category. However, today Flexi cap is the largest mutual fund category and this has led to pressure from distributors and investors for us to be present in this category. Turning now to why we converted our consumer fund to a Flexi Cap fund, consistent with our predictive analytics, we have been underweight the consumer theme as a whole since mid-2021.
We believe a high inflationary environment is likely to persist over the next two years, which is why we believe consumer stocks will underperform the broader market. Therefore, despite the fact that Quant Consumption Fund was the best performing fund in its category and one of the best funds in the thematic space, we decided to convert it into a Flexi Cap Fund.
What is your strategy for this fund? Are there any basic principles you would follow?
Quant Flexi Cap Fund will dynamically realign its portfolio across the three caps, guided by Valuation Analytics, Liquidity Analytics & Risk Appetite Analytics (VLRT Framework). These, together with predictive analytics, lead to better timing of investments, thus striving to deliver superior risk-adjusted returns.
Quant Global Research believes that 2018-2023 will be remembered as the most volatile phase in the history of global financial markets. Volatility indices will remain high for a long time, with spikes of 50-60% possible on several occasions. Price movements of 10-15% on a weekly or monthly basis will become the norm. This will be followed by a global reset phase which may last until 2047. In the global reset phase, the world as we know it will change shape significantly. The money will go from DMs to EMs. Asia and India, in particular, will be the main beneficiaries of this period
The essential condition for being relevant and succeeding in this phase will be the ability to adapt. We have always strived to make volatility our friend and overcome it using an aggressive style of money management. Therefore, we believe Quant Flexi Cap is well equipped to navigate the market roller coaster.
What are your plans for the consumption theme? Are you going to launch a new program in this segment?
We are not currently planning to launch a consumer fund. However, when the time is right and we see the medium to long term cycle change in favor of the consumer theme, we will evaluate the option of launching a consumer fund.