Quant Mutual Fund Has Struggled Recently: What Investors Should Know

Quant Mutual Fund is an aggressive player in India’s investment world, known for taking bigger risks to chase higher profits. But lately, some of its investment plans haven’t been performing as well as expected, leaving investors concerned. Let’s break down what Quant Mutual Fund is, how it works, and why its recent performance has raised eyebrows.

What is Quant Mutual Fund?

• Founder: It was founded by Sandeep Tandon, who has over 25 years of experience in the financial markets. He leads the fund with bold, data-driven strategies.
• Unique approach: Uses a computer-based system (called a quantitative model) and data analysis to pick investments.
• Past success: Its smart strategies delivered strong profits, attracting many investors.
• Growing popularity: The fund’s Assets Under Management (AUM), the total money it manages, has grown significantly, with Rs 99,000 crore as of June 2025.

This strategy uses a special computer-based system (a quantitative model) and data analysis to make investment choices. In the past, this method delivered excellent returns, which attracted a large number of investors. This led to a significant increase in its AUM, which is the total value of all the money it invests for its clients. However, the fund's recent performance has worried many investors because several of its investment plans (schemes) have been underperforming (not doing as well as expected). This blog will look into the reasons for this recent drop in performance.

A Look at the Past: A Story of Spectacular Growth

For a long time, Quant Mutual Fund has been a standout performer in the Indian mutual fund industry.
  A unique investment approach called VLRT, which stands for:

• Valuation – Is the investment worth its price?
• Liquidity – How easily can it be converted to cash?
• Risk Appetite – How much risk are investors willing to take?
• Time – Is it the right moment to invest?

This data-driven method helped Quant navigate the ups and downs of the stock market with great success.

The fund was able to quickly change its investments, moving to riskier assets when it saw an opportunity for high growth ("risk-on") and shifting to safer ones when the market seemed uncertain ("risk-off"). This focus on making decisions based on data led to very good profits (returns) across its investment plans (schemes). Because it consistently performed so well, the total money it managed (AUM) grew at an incredible rate. It shot up from just Rs 235 crore in 2018 and peaked at Rs 1,01,000 crore by September 2024.

Reasons why Quant Mutual Fund is Struggling

High Portfolio Turnover

Quant Mutual Fund frequently buys and sells stocks to seize market opportunities. For instance, the Quant Active Fund has a turnover rate of about 500%, meaning its portfolio was fully replaced five times in a year. The portfolio turnover ratio shows how often a fund changes its holdings. A 100% turnover means the fund replaces its entire portfolio once a year; 500% means it does so five times.

Example: Think of a wardrobe with 10 shirts. If you replace all 10 new shirts five times in a year, that’s a 500% turnover. This frequent swapping aims to pick the best shirts but can raise costs like fees and taxes. 

Heavy Bets on Oil and Gas

• The Focus: Quant put a big chunk of its money into the oil and gas sector, with a major investment in Reliance Industries. This stock made up almost 9% of the portfolio in some of its key funds.
• The Impact: This heavy reliance on one sector shaped the fund’s overall results.

Underinvestment in Financial Services

• The Gap: Unlike the market average (benchmark), which suggests putting 26% into financial services (like banks), Quant’s funds are only allocated around 18.5%. This is called an "underweight" position.
• The Cost: Since the financial sector did well last year, this lower investment hurt the fund’s profits, missing out on a strong growth area.

Struggles with Specific Stocks

• The Players: Beyond Reliance, Quant heavily invested in:
  • Jio Financial Services (about 8%), which saw its stock price drop 50% from its peak last year.
  • LIC (almost 5%), which underperformed.
  • RBL Bank, with its stock falling nearly 40%.
• The Risk: Putting so much money into just a few companies (concentration) is a risky move, a "double-edged sword." It boosted profits during market upswings (bull runs) but led to bigger losses when the market dipped (market correction).

This strategy didn’t just affect one fund; it rippled across popular plans like the Quant Multi Cap Fund and Quant Mid Cap Fund. Both have seen their performance drop due to these sector and stock-specific choices. The poor performance was significant enough to halt the fund’s impressive growth in total managed money (AUM).

Why Quant's Fund Manager Remains Confident Despite Underperformance

• Optimism Amid Challenges: Despite recent turbulence, the fund's management, led by Sandeep Tandon, remains confident about its long-term prospects.
• Dynamic Strategy: In a recent interview, Sandeep highlighted that Quant’s investment approach is built to adapt to shifting market conditions, ensuring flexibility.
• Data-Driven Opportunities: He emphasised the fund’s use of data to spot undervalued sectors and stocks with strong growth potential.
• Portfolio Adjustments: The fund is actively rebalancing, cutting back on bank exposure while boosting investments in NBFCs and the insurance sector, which are seen as undervalued opportunities.

Conclusion: A Test of Conviction

Quant Mutual Fund's recent underperformance highlights the inherent risks associated with its high-conviction, aggressive investment strategy. While the fund's past performance has been exceptional, its concentrated bets have made it vulnerable to sector-specific downturns. However, the fund house's management remains confident in its ability to navigate the current challenges and deliver long-term value to its investors. The coming months will be a crucial test of whether Quant's dynamic, data-driven approach can once again outperform the market.

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