Quant Value Fund discloses its first portfolio: not for faint hearted people!
If you want to walk fast, walk alone but if you want to walk far, walk together—a Whatsapp forward reads. Although this principle sounds logical otherwise, it may not hold much ground in the world of investments.
A crowded trade rarely takes you far, although momentum can generate quick results.
If you can walk down a less-travelled or completely uncharted road, rewards can be rich. But costs, in the form of potential losses, could be high too in that case. This forms the basis of contra and value investing.
In mid-November last year, we talked about a New Fund Offer (NFO)—Quant Value Fund. Recently, it has disclosed its first portfolio, as on December 31, 2021. Let’s see what it looks like.
Quant Value Fund had an AUM (Assets Under Management) of Rs 281.93 crore on December 31, 2021.
The fund held just 26 stocks and remained largely invested with equity assets accounting for 98% of the portfolio.
No IT and no private sector banks…
A consensus is building amongst experts that financials are likely to make a strong comeback in 2022, led by private sector lenders. Quant Value Fund seems unimpressed with this view and appears to be walking the talk.
Quant Value Fund has an 8.7% exposure to banks but you will find only two public sector banking names in its portfolio—State Bank of India (6.78%) and Bank of Baroda (1.92%). The fund has rather preferred to bet on the theme of capital market infrastructure and non-lending financial services companies such as MCX (5.21%) and ICICI Lombard General Insurance (4.12%).
In October 2021, we had interviewed Sandeep Tandon, Director and CEO of Quant Mutual Fund. Our interpretation of his views was that the valuations in IT were peaking out then. The fund house sounded unexcited about the stock market prospects of the popular theme of technology.
Following a high conviction approach
Quant Value Fund has been showing immense faith in its high conviction calls. For instance, consumer non-durable features in the top-5 sectors of the fund but there’s just one consumer non-durable company (ITC) in the portfolio.
Quant Value Fund has invested 5.78% of its assets in ferrous metals—Tata Steel (4.34%) and Rama Steel Tubes (1.44%). This comes at a time when many experts have been sounding cautious about the ferrous metal space and predicting a weak demand for steel in 2022.
But what can really raise many eyebrows is Quant Value Fund’s bet on the Media & Entertainment sector. The performance of media stocks vis-à-vis broader markets has improved considerably over the last one year. However, many of them still quote much below their 2017 highs.
With four of its holdings—Network18 Media & Investments (5.34%), TV Today Network (5.24%), Zee Entertainment (3.94%) and Sun TV Network (1.99%)—Quant Value Fund covers a large spectrum of the media sector. Here too, it has refrained from investing in popular names such as PVR, Inox Leisure, Saregama and Nazara Tech, amongst others.
The fund has a portfolio beta of 1.18. In theory, a portfolio beta of greater than 1 indicates that the fund is more volatile than its benchmark. This number isn’t static though.
In a nutshell
While it’s too early to talk about the performance of the fund, it looks like Quant Value Fund isn’t for faint hearted people.
Do you think Quant Value Fund will prove its mettle over time, just like many other offerings from Quant’s stable have done in the last 2 years? Do share your feedback in the comments section.
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