Quant Infrastructure Fund: In-Depth Analysis
Fund Overview
- Fund Name: Quant Infrastructure Fund Direct Growth
- Fund Type: Equity Sectoral/Thematic – Infrastructure
- Fund Manager Background: The fund is managed by Ankit Pande, with 11 years of experience, and Vasav Sahgal.
- Fund Inception Date: 26th August 2007
Portfolio Breakdown
The fund’s portfolio is diversified across various infrastructure-related sectors. Here are the top 15 stock holdings as of the latest data:
- Tri-Party Repo (TREPS) – 10.85%
- Reliance Industries Ltd. – 9.60%
- JIO Financial Services Ltd. – 6.00%
- IRB Infrastructure Developers Ltd. – 5.69%
- Life Insurance Corporation Of India – 5.69%
- Adani Power Ltd. – 5.11%
- Kalyani Steels Ltd. – 4.07%
- Swan Energy Ltd. – 4.05%
- Steel Authority Of India Ltd. – 3.98%
- NCC Ltd. – 3.34%
Returns and Rankings
The Quant Infrastructure Fund has consistently outperformed its category peers over various time periods:
- 1 Year Returns: 71.6% (Rank: 2 in category)
- 3 Year Annualized Returns: 41.8% (Rank: 1 in category)
- 5 Year Annualized Returns: 35.0% (Rank: 1 in category)
Fund Analysis
Pros:
- Excellent long-term performance, outpacing category averages
- Experienced fund management team
- Focused investment strategy in the infrastructure sector
- Reasonably low expense ratio of 0.73%
Cons:
- High portfolio turnover ratio of 307%, which could lead to increased costs
- Significant exposure to a few large holdings, increasing concentration risk
Quant Infrastructure Fund stands out as a top-performing sectoral fund within the infrastructure category. Its consistent outperformance, focused investment strategy, and experienced fund management team make it an attractive option for investors seeking exposure to the infrastructure sector. However, the high portfolio turnover ratio and concentrated holdings are potential areas of concern that investors should consider.
Quant Infrastructure Fund Direct Growth: A Comprehensive Analysis
Key Data
- NAV (as of 15 Mar 2024): ₹39.33
- Minimum SIP Amount: ₹1,000
- Fund Size: ₹2,207.59 Cr
- Rating: 5
- Expense Ratio: 0.73%
- Turnover Ratio: 307%
- Returns (1Y/3Y/5Y): 71.6% / 41.8% / 35.0%
- Fund Manager: Ankit Pande
- Inception Date: 26-Aug-07
- Asset Allocation: Equity (82.11%), Debt (10.5%), Others (7.39%)
Analysis
Suitability for Different Investor Profiles
- High-Risk Investors: The fund’s high return rates (71.6% in 1Y) and a significant equity allocation make it an attractive option for high-risk investors. Its sectoral focus on infrastructure also adds to its risk-reward profile.
- Medium-Risk Investors: The strong historical performance over 3 and 5 years (41.8% and 35.0%, respectively) may appeal to medium-risk investors looking for substantial growth in the medium to long term.
- Low-Risk Investors: Given the fund’s high turnover ratio (307%) and sectoral focus, it might not be suitable for low-risk investors due to the inherent volatility in the infrastructure sector.
Investment Horizon
- Long-Term (More than 5 years): With top rankings in its category for 3Y and 5Y returns and a focus on infrastructure, a sector with long-term growth potential, this fund is well-suited for long-term investors.
- Medium-Term (1-5 years): The fund’s impressive returns over the past 3 years and a relatively low expense ratio (0.73%) make it a good candidate for medium-term investments.
- Short-Term (1 year or less): Given its high short-term returns (71.6% in 1Y), it might appeal to some short-term investors, but the high volatility and turnover ratio suggest caution.
Performance and Fees
- The fund’s performance has outpaced its peers in the 1Y, 3Y, and 5Y categories, holding top rankings. This indicates strong fund management and investment strategies.
- A low expense ratio (0.73%) enhances its attractiveness by reducing the cost of investment, potentially leading to better net returns for investors.
- However, the high turnover ratio (307%) might raise concerns about the fund’s trading activity and its impact on costs and taxable events.
Advanced Ratios
- Sharpe Ratio (Fund): 2.94 (High value indicates good risk-adjusted return)
- Alpha: 27.90 (Shows the fund’s performance relative to a benchmark, with a higher alpha indicating better performance)
- The fund’s advanced ratios suggest strong risk-adjusted performance and the ability to outperform its benchmark.
Key Ratios and Metrics Analysis
Current NAV
The current NAV (Net Asset Value) of the Quant Infrastructure Fund Direct Growth plan as of 15th March 2024 is ₹39.33.
Turnover Ratio
The fund has a relatively high turnover ratio of 307.0%. A high turnover ratio can indicate frequent buying and selling of securities within the fund’s portfolio, which may lead to increased transaction costs and potential tax implications. However, a high turnover ratio is not necessarily detrimental if the fund manager’s strategy involves actively managing the portfolio to capture opportunities and generate alpha.
For long-term investors, a lower turnover ratio is generally preferred as it can lead to lower costs and potentially better tax efficiency. However, in the case of the Quant Infrastructure Fund, its exceptional performance over multiple time periods may justify the higher turnover ratio.
Returns
The fund has delivered outstanding returns across various time periods:
- 1 Year Returns: 71.6%
- 3 Year Annualized Returns: 41.8%
- 5 Year Annualized Returns: 35.0%
These returns have consistently outperformed the category averages, ranking the fund as #1 in its category over 3 and 5-year periods.
Expense Ratio
The fund’s expense ratio is 0.73%, which is lower than the category average expense ratio of 1.75%. A lower expense ratio is generally desirable as it can lead to better long-term returns for investors.
PE Ratio
The fund’s portfolio has an average PE ratio of 23.20, which is lower than the category average PE ratio of 41.60. A lower PE ratio may indicate that the fund’s holdings are relatively undervalued compared to its peers.
Sharpe Ratio
The fund’s Sharpe ratio of 2.99 is lower than the category average Sharpe ratio of 3.33. The Sharpe ratio measures the risk-adjusted returns of the fund, with a higher value indicating better returns for the level of risk taken. While the fund’s Sharpe ratio is slightly lower than the category average, its exceptional returns over various time periods suggest that it has effectively managed risk.
Based on the provided data, the Quant Infrastructure Fund stands out with its strong performance, reasonable expense ratio, and attractive valuation metrics (PE ratio). However, investors should consider the higher turnover ratio and slightly lower Sharpe ratio when evaluating their investment objectives and risk tolerance.
Top Holdings Company
The Quant Infrastructure Fund Direct Growth has a diversified portfolio predominantly in the infrastructure sector, with its top holdings including:
- Tri-Party Repo (TREPS): 10.85%
- Reliance Industries Ltd.: 9.60%
- JIO Financial Services Ltd.: 6.00%
- IRB Infrastructure Developers Ltd.: 5.69%
- Life Insurance Corporation Of India: 5.69%
- Adani Power Ltd.: 5.11%
- Kalyani Steels Ltd.: 4.07%
- Swan Energy Ltd.: 4.05%
- Steel Authority Of India Ltd.: 3.98%
- NCC Ltd.: 3.34%
This mix of holdings indicates a strong inclination towards major infrastructure and related companies, potentially offering robust growth opportunities but also reflecting a concentrated risk in the infrastructure sector.
Advanced Ratios
- Standard Deviation: 17.92%, indicating the fund’s past performance volatility.
- Beta: 1.14, showing the fund’s sensitivity to market movements. Higher than the category average, suggesting higher risk.
- Sharpe Ratio: 2.94, which measures the performance of the investment compared to a risk-free asset, after adjusting for its risk. It indicates a relatively high risk-adjusted return.
- Sortino Ratio: 4.60, a variation of the Sharpe ratio that differentiates harmful volatility from total overall volatility by using the asset’s standard deviation of negative portfolio returns—called downside deviation. This ratio also indicates a strong risk-adjusted return.
- Alpha: 27.90, representing the fund’s ability to outperform its benchmark. A higher alpha indicates the fund has performed better than its benchmark index.
Peer Comparison
Compared to its peers, Quant Infrastructure Fund Direct Growth shows a competitive edge in several areas:
- Expense Ratio: At 0.73%, it’s lower than most of its peers, indicating cost-efficient management.
- Performance: With 1-year, 3-year, and 5-year returns at 71.6%, 41.8%, and 35.0% respectively, the fund has outperformed its category averages significantly, placing it at a high rank within its category.
- Turnover Ratio: At 307%, this is high, suggesting a very active trading strategy which could lead to higher trading costs and tax implications for investors.
Fund House and Investment Objective
The fund is managed by Quant Money Managers Limited, which has established a solid reputation for managing investment portfolios. The primary investment objective of the Quant Infrastructure Fund is to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio of companies focused on the infrastructure sector. This objective suits investors looking for exposure to infrastructure development in India, with a tolerance for high risk and volatility associated with sectoral funds.
Pros
- Strong performance history, outperforming peers in short and long term.
- Low expense ratio, enhancing net returns for investors.
- High alpha, indicating the fund’s effective management and ability to outperform the benchmark.
Cons
- High turnover ratio, implying potentially higher trading costs and tax burdens.
- Concentrated sector exposure, which may increase risk during economic downturns affecting the infrastructure sector.
- The fund’s beta suggests higher sensitivity to market fluctuations, making it more volatile.
In conclusion, the Quant Infrastructure Fund Direct Growth appears to be an attractive option for investors seeking high returns from the infrastructure sector and willing to accept higher volatility and risk. Its low expense ratio and strong performance relative to peers are notable advantages, though the high turnover ratio and sector-specific risk profile warrant careful consideration.
Benchmark and Risk Profile
The Quant Infrastructure Fund is benchmarked against the Nifty Infrastructure Total Return Index (TRI). The fund aims to generate capital appreciation and long-term growth opportunities by investing in a portfolio of infrastructure-focused companies.
Risk Profile
The Quant Infrastructure Fund is an equity sectoral fund, which means it invests predominantly in stocks of companies operating in the infrastructure sector. Sectoral funds are generally considered to be high-risk investments due to their concentrated exposure to a specific sector. The fortunes of the fund are closely tied to the performance of the infrastructure sector, which can be cyclical and heavily influenced by economic conditions, government policies, and regulatory changes.
Market Capitalization Breakdown
Based on the provided data, there is no specific information about the market capitalization breakdown of the fund’s portfolio. However, as an equity sectoral fund focused on the infrastructure sector, it is likely that the fund invests across large-cap, mid-cap, and small-cap companies operating in infrastructure-related industries.
Suitable Investor Profile
The Quant Infrastructure Fund may be suitable for investors with the following profile:
- High-risk tolerance: Given the fund’s concentrated exposure to the infrastructure sector, it carries a higher level of risk compared to diversified equity funds. Investors should have a high-risk appetite and the ability to withstand significant market fluctuations.
- Long-term investment horizon: Sectoral funds are best suited for investors with a long-term investment horizon, as they can experience periods of volatility and underperformance due to sector-specific factors.
- Belief in the infrastructure sector’s growth potential: Investors should have a positive outlook on the growth prospects of the infrastructure sector in India, driven by factors such as government initiatives, increasing urbanization, and infrastructure development.
- Diversification: The Quant Infrastructure Fund can serve as a complementary investment to a well-diversified portfolio, providing exposure to the infrastructure sector while balancing out the overall risk.
It’s important to note that investors should carefully consider their investment objectives, risk tolerance, and financial situation before investing in the Quant Infrastructure Fund or any other sectoral fund.
Risk Profile Analysis
The Quant Infrastructure Fund Direct Growth is characterized by a Very High Risk profile. This assessment is based on several factors inherent to its operation and focus area:
- Sectoral Focus: Being a sectoral fund with a concentration on infrastructure, it is more susceptible to the cyclical and specific risks associated with the infrastructure sector, including regulatory changes, economic cycles, and project-specific risks.
- Volatility: The fund has shown high returns variability with a standard deviation of 17.92%, indicating high volatility compared to the category average.
- Turnover Ratio: A high turnover ratio of 307% suggests the fund engages in frequent trading which can contribute to its risk through increased costs and potential for capital gains taxation.
- Advanced Ratios: With a beta of 1.14, the fund is more sensitive to market movements than the broader market, which can lead to higher volatility in its net asset value (NAV).
Pros:
- Potential for high returns, especially for investors with a strong understanding or belief in the infrastructure sector’s growth.
Cons:
- High volatility and sector-specific risks could lead to significant short-term losses.
- High turnover ratio could result in additional costs and tax implications for the investor.
Scheme Information
The Quant Infrastructure Fund Direct Growth aims to generate capital appreciation and provide long-term growth opportunities by investing in a portfolio concentrated in the infrastructure sector. Key details of the scheme include:
- NAV (as of 15 Mar 2024): ₹39.33
- Minimum SIP Amount: ₹1,000
- Fund Size: ₹2,207.59 Cr
- Expense Ratio: 0.73%
- Rating: 5
- Returns (1Y/3Y/5Y): 71.6%, 41.8%, 35.0%
- Inception Date: 26-Aug-07
- Fund Type: Open Ended
The scheme is suitable for investors looking for exposure to the infrastructure sector, willing to tolerate high volatility and risk for the potential of substantial returns.
AMC Profile and AUM in Details
Quant Money Managers Limited (“QMML”) serves as the Asset Management Company (AMC) for the Quant Infrastructure Fund. Established on December 12, 1995, QMML has been approved to act as an AMC, showcasing a longstanding presence in the mutual fund industry.
- Total AUM: ₹59,080.21 Cr across all schemes managed by the AMC.
- Number of Schemes: 27, indicating a broad range of investment options for various investor preferences.
- AMC Reputation: Quant Money Managers Limited is known for its innovative investment strategies and a solid track record in managing investments across different market cycles.
Pros:
- The AMC’s large AUM indicates trust and confidence from investors, showcasing its capability to manage funds effectively.
- A diverse range of schemes allows investors to choose according to their risk appetite and investment goals.
Cons:
- Being a specialized AMC with a focus on dynamic and thematic funds, investors might find the offerings riskier compared to more diversified or conservative options available in the market.
In conclusion, the Quant Infrastructure Fund Direct Growth, managed by Quant Money Managers Limited, presents an attractive opportunity for investors with a high-risk tolerance and a bullish outlook on the infrastructure sector. However, the fund’s high volatility and sector-specific risks warrant a cautious approach, making it more suitable for seasoned investors or those with a long-term investment horizon.