Quant Small Cap Fund Review: Find Out If You Need it in Your Portfolio

Insights into Quant Small Cap Fund

In the vast landscape of investing, you may get confused about picking one scheme, right? Here is the alternative; the Quant Small Cap Fund. It has garnered attention as one of the top-performing small-cap funds in recent years. It has delivered exceptional returns that have outpaced its peers and the broader small-cap index.

Investors considering adding small-cap exposure to their portfolios. The question arises: is the Quant Small Cap Scheme a worthy addition?

Let’s find the answer to this question by conducting a Quant Small Cap Mutual Fund Review in detail.

Stellar Long-Term Performance of Quant Small Cap Fund

The Quant Small Cap Mutual Fund has delivered an impressive 5-year annualized return of 38.33%. Significantly outperforming the small-cap category average of 25.4% over the same period. Its 1-year and 3-year returns of 72.01% and 41.98% respectively are also among the best in the small-cap fund universe.

This consistent outperformance is due to the fund’s disciplined investment approach. Moreover, it focuses on identifying high-quality small-cap companies. These companies have strong growth potential and sustainable competitive advantages. The fund’s portfolio is well-diversified across sectors. This reliability helps mitigate concentration risk. For instance, it invests in sectors such as technology, healthcare and consumer goods. This ensures that the fund is not overly reliant on any single industry.

How experienced is the Management Team of Quant Small Cap Fund?

An experienced team at Quant Mutual Fund, led by Sandeep Tandon. He is the Chief Investment Officer and manages the Quant Small Cap Mutual Fund. The team’s expertise in stock-picking and active management. These crucial factors have been key drivers to the fund’s success. The management team deep has an understanding of market dynamics. Therefore, rigorous research processes enable them to identify and invest in companies. This results in giving the potential to deliver superior returns.

Relatively Higher Volatility in Quant Small Cap Fund

As with most small-cap funds, the Quant Small Cap Fund exhibits higher volatility compared to large cap and mid cap funds:

Nature of Small-Cap Stocks

• Small-cap stocks are generally more volatile than their large-cap and mid-cap counterparts.
• These companies are often in earlier stages of growth. It makes them more susceptible to market fluctuations and economic changes.

Standard Deviation

• The Quant Small Cap MF has a standard deviation of 18.42%.
• Standard deviation is a statistical measure. It indicates the extent of variation or dispersion of a set of values.
• A higher standard deviation indicates greater volatility. This means the fund’s returns can vary widely in the short term.

Comparison to Category Average

• The category average standard deviation for small-cap funds is 11.69%.
• The Quant Small Cap MF’s standard deviation is significantly higher. It suggests it experiences greater fluctuations compared to its peers.

Short-Term Fluctuations

• High volatility means the fund’s net asset value (NAV). It can rise or fall sharply over short periods.
• Investors may see more dramatic increases and decreases in their investment value.

Inherent Risks

• Investing in smaller companies comes with inherent risks, such as less established business models. The higher sensitivity to economic downturns and less access to capital.
• These risks contribute to the higher volatility observed in small-cap funds.

Market Sensitivity

• Small-cap funds are more sensitive to market trends and economic cycles.
• They may perform exceptionally well during periods of economic growth. However, you can also suffer more during downturns.

Investor Considerations

• Investors need to be prepared for the higher risk associated with this volatility.
• It’s important to have a long-term investment horizon to ride out the short-term fluctuations and benefit from potential high returns.

Diversification

• Diversifying your portfolio with a mix of large-cap, mid-cap, and small-cap funds can help manage the overall risk.
• While the Quant Small Cap Mutual Fund can provide high returns. Balancing it with more stable investments can mitigate the impact of its volatility.

Potential for Higher Returns

• Despite higher volatility, small-cap funds like the Quant Small Cap Stock can offer substantial returns over the long term.
• The potential for higher growth in small companies can result in significant gains for patient investors.

Suitability for Long-Term Investors of Quant Small Cap Fund

Given the higher volatility, small-cap funds, including the quant small cap mutual fund. It is best suited for investors with a long-term investment horizon of at least 5-7 years. This extended timeframe allows investors to ride out market fluctuations. You can benefit from the long-term growth potential of small-cap stocks. Shorter-term investors may experience higher volatility and potentially lower returns.

What is the Expense Ratio and Fund Size of Quant Small Cap Fund?

The Quant Small Cap Fund has an expense ratio of 0.70%. Likewise, the direct plan is slightly higher than the small-cap category average of 0.52%. However, the fund’s large asset base of over ₹17,000 crores. It suggests economies of scale.  This helps in keeping costs in check and providing operational efficiencies.

Additional Considerations for Investors of Quant Small Cap Fund

The following points should be kept in mind before investing in this particular stock:

1. Risk Tolerance

Investors should assess their risk tolerance before investing in the quant small cap mutual fund. Small-cap funds can offer substantial returns, but they also come with higher risks compared to large-cap and mid-cap funds.

• Diversification

Including a small-cap fund like the Quant Small Cap Mutual Fund in your portfolio can provide diversification benefits. Small-cap stocks often perform differently from large-cap stocks, which can help spread risk.

• Market Conditions

The performance of small-cap funds can be influenced by market conditions. In bullish markets, small-cap stocks can outperform, but they may underperform during market downturns. Investors should be prepared for these fluctuations.

Conclusion

The Quant Small Cap MF’s exceptional long-term performance and experienced management team. Moreover, the diversified portfolio makes it a compelling option for investors. If you are seeking exposure to the small-cap segment this is your best bet. The best option for small cap investors is via SIP or lumpsum investment. It gives you a balanced approach as a smart investor.

However, its higher volatility and the need for a long-term investment horizon should be carefully considered before investing.

As with any mutual fund, investors should evaluate the fund’s fit within their overall investment portfolio and risk tolerance. For those looking to add a high-performing small-cap fund to their portfolio, the Quant Small Cap Mutual Fund presents a promising opportunity.