Quantum LT Equity Fund, an equity scheme known to be a good value investing bet, which is based on the assumption that stocks are currently trading at a lower value than their underlying fundamental value, has increased its overall cash proportion. The scheme with a total asset base of Rs. 757 crores, owing to high valuations as well as lesser opportunities to find stock winners has raised its cash levels to 17.5% of the total portfolio value.
This strategy of higher cash holding in the scheme is generally adopted by fund managers in a case when they are of the view that market run up is high and is due for correction in some time. But at a time when the market has made new highs and in a case if it constantly continues to tread higher, the strategy can go against the investor.
Return from the Quantum LT Equity fund over various periods
The fund over a period of time has managed to provide returns that exceed the benchmark BSE Sensex returns. For a 5-year term, the fund yielded return of 18% and for a 10- year term it provided returns of 14.1% as against the BSE Sensex return of 8.7% during that time. In one year time, the fund fetched returns of 17.4% which is higher in comparison to benchmark Sensex return of 15.8%. So, it has proved to be a steady performer, barring in the current scenario where it underperformed benchmark indices and posted returns of 11.48% in the last six months.
Who should invest in Quantum LT Equity Fund?
Different investment advisory firms hold different view. Morningstar Investment Advisers suggests that "Investors who have high level of conviction in a fund manager's call and have the patience to stay invested for atleast five year, should consider such a fund".
Fund manager of Quantum Asset Management reiterates, " We have a stock price specific buy and sell approach for our universe of stocks. If prices move up and hit our target, we sell. We prefer being in cash, as we do not see enough opportunities at these valuations".