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10 Charts - Exclusive Webinar

10 Charts - Exclusive Webinar

In this exclusive webinar, Sorbh Gupta, Fund Manager, Equity, Quantum Mutual Fund & Arvind Chari, CIO, Quantum Advisors will questions like how has Covid impacted India’s long term growth potential? What opportunities does India’s growth story create? How are equities poised to play India’s long-term growth story?

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Quantum Mutual Fund

April 30, 2021
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Transcript

  1. 10 Charts, 1 Growth Story: India Speakers: Mr. Sorbh Gupta

    – Fund Manager, Equity Mr. Arvind Chari – CIO, Quantum Advisors April 23, 2021
  2. What Drives Growth? Source: CMIE, Quantum Research, Quarterly Data till

    December 2020 -30 -20 -10 0 10 20 30 Dec-99 Oct-00 Aug-01 Jun-02 Apr-03 Feb-04 Dec-04 Oct-05 Aug-06 Jun-07 Apr-08 Feb-09 Dec-09 Oct-10 Aug-11 Jun-12 Apr-13 Feb-14 Dec-14 Oct-15 Aug-16 Jun-17 Apr-18 Feb-19 Dec-19 Oct-20 GDP(nominal) GDP(real)
  3. Investments drive Growth 0.0 2.0 4.0 6.0 8.0 10.0 12.0

    14.0 16.0 % growth China GDP China Capital 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 % growth India GDP India Capital Source: TED Database, As on July 2020.
  4. Rising savings and investment sustains Growth

  5. India will be a Large Part of The Global Economy:

    You Cannot Ignore It Source: Quantum, Angus Maddison, University of Groningen
  6. India’s Continued Reforms will Make India the Next China 2.3%

    3.9% 3.2% 2.9% 3.7% 2.2% 3.4% 4.0% 3.5% 3.3% 5.9% 5.4% 5.3% 5.2% 6.1% 6.7% 5.8% 8.5% 7.1% 4.9% 9.6% 9.9% 6.5% 12.3% 9.5% 7.8% 8.7% 11.6% 8.8% 7.1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% Jan 80 - Oct 84 Congress Nov 84 - Dec 89 Congress Jan 90 - Jun 91 Janata Dal* July 91 - May 96 Congress Jun 96 - Mar 98 DF* Apr 98 - Apr 99 BJP* Jun 99 - May 04 NDA* Jun 04 - May 09 UPA* Jun 09 - May 14 UPA* Jun 14 - Dec 20 NDA** Real GDP Growth World India China India average 6.1% China average 9.2% Source: Worldbank, RBI and www.parliamentofindia.nic.in as of December 2020. Please note that data used for World GDP for 2020 is a median Estimate since World Bank data is not yet available and India GDP data is governments second advance estimate released at the end of September.
  7. India Demographics will Boost Savings

  8. India Demographics will Boost Income

  9. Growing Incomes Create Opportunities Source: Morgan Stanley research

  10. These Opportunities Draw Investors & Investments 0.0 500.0 1,000.0 1,500.0

    2,000.0 2,500.0 3,000.0 3,500.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cumulative Foreign Direct Investments (FDI) USD Billion China India 0.0 200.0 400.0 600.0 800.0 1,000.0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Cumulative Foreign Portfolio Inflows (FPI) into Equity and Debt, USD Billion China India Source: World Bank
  11. India’s Economic Growth Reflected in Corporate Earnings Source: % change

    in INR, CLSA and Bloomberg Finance L.P., as of January 31, 2021. CY 21 and CY 22 are estimate numbers.
  12. India’s Economic Growth Reflected in Stock Market Returns 100 300

    500 700 900 1100 1300 1500 Mar-03 Nov-03 Jul-04 Mar-05 Nov-05 Jul-06 Mar-07 Nov-07 Jul-08 Mar-09 Nov-09 Jul-10 Mar-11 Nov-11 Jul-12 Mar-13 Nov-13 Jul-14 Mar-15 Nov-15 Jul-16 Mar-17 Nov-17 Jul-18 Mar-19 Nov-19 GDP(nominal) Sensex EPS SENSEX Index Source: % change in INR, CLSA and Bloomberg Finance L.P., as of January 31, 2021. CY 21 and CY 22 are estimate numbers Past performance may or may not sustained in future
  13. Based on Historical Data: A simple Equity Market Return Assumption

    Indian Equity Market Return Assumptions & Expectations GDP Growth, real +6.5% + Inflation +5.0% = GDP Growth, nominal +11.5% If GDP Growth = Revenue Growth (Revenues of Typical Companies) +11.5% Profit Growth of Typical Companies +11.5% Companies, listed and in an Index > Typical Company +13.5% In Long-term Equity Return should Reflect Corporate Earnings Source: RBI, CMIE, Quantum Estimates
  14. Equities: Questions in Investor’s Mind What will be the impact

    of Resurgence of Covid-19 on Equities ? Will Value Style Perform ? Large Caps or Mid/Small Caps, where to invest? Why is diversification Important?
  15. Covid-19: Second Wave or Tsunami April 30 2020 June 30

    2020 Sep 30 2020 Dec 31 2020 Feb 28 2021 April 22 2021 Daily new infections 1,901 18,522 80,472 21,822 16,752 314835 Deaths- Cumulative 1,075 16,893 97,497 148,738 157,051 184,687 Vaccine Shots –Cumulative 14,301,497 132,015,981 Source: John Hopkins University
  16. Covid-19: Lockdown déjà vu ‘This Time is Different’ How is

    Corporate India Placed ? The lockdowns are lesser stringent and more localized this time Corporate Balance-Sheet are better. The focus has been on debt reduction and liquidity Last one year has been all about cost control and business continuity Pvt. Banks & NBFC’s have raised capital and are best capitalized in last 10 years As Global Recovery is intact, export companies and commodity producers are comfortably placed
  17. Lockdowns Need to be Contained: India’s Biggest Risk – Jobs

    & Income
  18. Large Caps or Mid/Small Caps, Where to Invest?

  19. Corporate India: Listed Companies Are Faring Better

  20. Smaller Companies are Losing Market Share -60% -50% -40% -30%

    -20% -10% 0% 10% 20% 30% Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Sales Growth Top 3 Deciles Bottom 3 Deciles -40% -30% -20% -10% 0% 10% 20% 30% Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Mar-17 Sep-17 Mar-18 Sep-18 Mar-19 Sep-19 Mar-20 Sep-20 Fixed Assets Top 3 Deciles Bottom 3 Deciles CMIE- Economic Outlook, Data as on December 2020
  21. Business Strength of Larger Companies Reflect in Equity Returns Over

    Long Term Past performance may or may not sustained in future
  22. Spiking PER Overstates Valuation Given The June Quarter’s Gap Down

    Source: Bloomberg Finance L.P., as March, 2020 Past Performance may or may not be sustained in future.
  23. Will Value Style Perform ?

  24. Value vs. Growth (2000-2010) Source: Bloomberg. Past Performance may or

    may not sustained in future.
  25. Value vs. Growth (2010-20) Source: Bloomberg. Past Performance may or

    may not sustained in future.
  26. 2000-10 vs. 2010-2020: How Different are the Macro Variables Last

    10 years are characterised by low global growth, low inflation & low interest rates Few companies which showed growth , were chased by liquidity making the market polarised 2000-10 2010-20 Average GDP growth Rate (India) YoY 6.32% 6.50% Average global GDP growth Rate ( US) YoY 2.23% 1.91% Average 10 Year G-Sec Yield ( India) 7.65% 7.60% Average 10 Year G-Sec Yield (US) 4.41% 2.22% Average Inflation (India) 5.53% 7.32% Average Inflation (US ) 2.57% 1.72% Source: World Bank, Reuters. Past performance may or may not sustained in future.
  27. 2021: How Things Stack Up For Value Strategy Source: Bloomberg.

    Past Performance may or may not sustained in future. Broad based economic recovery leading to earning upgrades. Normal inflation & interest rate cycle will be the key.
  28. Why is Diversification Important?

  29. Diversification: Different Styles Perform In Different Macro & Market Environment

    The input data has been sourced from valueresearch.com for calculating annual returns (this is data source and not methodology for calculation of returns) The annual period from CY16 to CY20 is 31st December ending. The YTD data is 31st March 2021 ending. Past performance may or may not be sustained in future. Returns (%) YTD CY20 CY19 CY18 CY17 CY16 Value Category return 7.95 10.13 -2.31 13.68 22.77 5.59 Large Cap Category return 3.00 14.47 6.12 15.10 16.77 2.43 Midcap Category Return 10.5 24.47 4.93 -10.55 42.51 4.77 Small Cap category return 12.90 27.98 -1.95 -19.03 50.06 6.93 BSE 200 3.84 16.07 8.87 -0.64 32.83 3.97 BSE Sensex -0.10 15.48 14.08 5.90 27.50 2.01
  30. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

    2016 2017 2018 2019 2020 2021* Sensex 49% Sensex 49% Gold 26% Sensex 83% Gold 23% Gold 32% Sensex 28% Sensex 11% Sensex 32% Bonds 9% Bonds 13% Sensex 30% Gold 8% Gold 16% Gold 28% Sensex 4% Gold 20% Gold 16% Bonds 9% Gold 24% Sensex 19% Bonds 7% Gold 12% Bonds 4% Bonds 14% Sensex -4% Gold 11% Gold 5% Sensex 7% Sensex 14% Bonds 17% Bonds -0.5% Bonds 4% Bonds 7% Sensex -52% Bonds 4% Bonds 5% Sensex -24% Bonds 9% Gold -5% Gold -8% Gold -7% Sensex 3% Bonds 5% Bonds 6% Bonds 11% Sensex 12% Gold -10% There have been years when equity markets had a brilliant run, years when only bonds were dependable, and years when gold shined the brightest, and these periods did not typically overlap Past performance may or may not sustained in future The chart ranks the best to worst performing indexes per calendar year from top to bottom *Data as of March 2021 Past performance may or may not be sustained in future. Based on S&P BSE Sensex; Domestic Gold prices and CRISIL Composite Bond Fund Index Source: Bloomberg Imagine someone holding an all equity portfolio in 2008, or holding none in the equity rally that followed? 30 Asset Classes Grow & Contract in Cycles
  31. Quantum Long Term Equity Value Fund Mr. Sorbh Gupta Work

    experience: 15 years. He has been managing this fund Since December1, 2020. Mr. Nilesh Shetty Work experience: 16 years. He has been managing this fund Since March 28, 2011. Value Fund • Uses bottom-up stock selection process used to minimize risk. • Follows disciplined research and investment process. • Low portfolio turnover. • Holds cash when stock are overvalued - no derivatives and no hedging. • A well-balanced portfolio: typically 25 to 40 stocks, across sector. Retirement Planning. Child’s Education. Child’s Marriage. Wealth Creation. Fund Manager Category of Scheme Features Useful for
  32. Quantum Long Term Equity Value Fund – A Must have

    Equity Diversified Fund Value Oriented Equity Diversified Fund since March 2006 Well balanced portfolio: typically 25 to 40 stocks, across sectors Instrumental for Long Term Financial Goals like Retirement, Child’s Education, Child’s Marriage & Wealth Creation A disciplined research and investment process Low portfolio turnover: Buy after Conviction, Hold it for long Holds shares or cash: No derivatives, No hedging
  33. Portfolio Positioning Winter crop (Rabi) production has been robust &

    monsoon is expected to be normal. Some of the portfolio stocks are well positioned to benefit from strong agri & rural economy High quality stocks available at reasonable valuations were added to the portfolio in the correction in February & March 2020 Higher weight in NBFC, Consumer discretionary and IT Portfolio stocks look comfortable after stress test - have strong balance-sheet or strong parentage to survive the downturn Existing cash holding will be used to add new names in case of correction
  34. 2021 – Boom & Bust, Evenly Poised • Boom: –

    Real economic activity continue to revive & corporate earning upgrade happen – Real estate revives – stamp duty cut, lower interest rates spur real estate demand – Factories relocate from China to India – Foreign flows – FDI + FII driven by higher yields and faster growth • Bust: – Poor Government Policy – Resurgence in Covid cases, Poor execution of Vaccine rollout – Rising Inflation could dampen Demand Recovery
  35. Solutions to meet Sustainable Development Goals: SGD-17 SMILE was born

    out of our desire to support credible NGOs and create a steady stream of money flow for them Since 2018, Quantum MF investors have supported 7 NGOs from diverse sectors via the SMILE facility WHAT IS SMILE? THE SMILE STORY OUTCOME SO FAR SMILE enables Quantum MF investors to contribute 10% of their investment in eligible schemes to charities vetted by HelpYourNGO + = “SMILE”
  36. SMILE Process Flow Q Long Term Equity Value Fund Q

    Equity Fund of Funds Q Dynamic Bond Fund Q Multi Asset Fund of Funds Q Gold Savings Fund Q Liquid Fund Donated to NGOs selected by investors and vetted by HelpYourNGO HelpYourNGO sends donation receipts and 80G Liaises with NGO grantees Monitors & reviews INVEST IN SMILE FACILITY DONATE TO NGO’S DONATION RECEIPTS Investors receive periodic program reports from HYNGO on the NGOs supported by them Investors receive periodic program reports from HelpYourNGO on the NGOs supported by them * Q Stands for Quantum for scheme names
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  40. Disclaimer – Terms of Use The data in this presentation

    are meant for general reading purpose only and are not meant to serve as a professional guide/investment advice for the readers. This presentation has been prepared on the basis of publicly available information, internally developed data and other sources believed to be reliable. Whilst no action has been suggested or offered based upon the information provided herein, due care has been taken to endeavor that the facts are accurate and reasonable as on date. Quantum AMC shall make modifications and alterations to the performance and related data from time to time as may be required as per SEBI Mutual Fund Regulations. Readers are advised to seek independent professional advice and arrive at an informed investment decision before making any investment. None of the Sponsors, the Investment Manager, the Trustee, their respective Directors, Employees, Affiliates or Representatives shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including lost profits arising in any way from the data/information/opinions contained in this presentation. The Quantum AMC shall make modifications and alterations to the performance and related data from time to time as may be required. Please visit – www.QuantumMF.com to read scheme specific risk factors. Investors in the Scheme are not being offered a guaranteed or assured rate of return and there can be no assurance that the schemes objective will be achieved and the NAV of the scheme may go up and down depending upon the factors and forces affecting securities market. Investment in mutual fund units involves investment risk such as trading volumes, settlement risk, liquidity risk, default risk including possible loss of capital. Past performance of the sponsor / AMC / Mutual Fund does not indicate the future performance of the Scheme. Statutory Details: Quantum Mutual Fund (the Fund) has been constituted as a Trust under the Indian Trusts Act, 1882. Sponsor: Quantum Advisors Private Limited. (liability of Sponsor limited to Rs. 1,00,000/-). Trustee: Quantum Trustee Company Private Limited. Investment Manager: Quantum Asset Management Company Private Limited. The Sponsor, Trustee and Investment Manager are incorporated under the Companies Act, 1956. 23rd April 2021 Mutual fund investments are subject to market risks, read all scheme related documents carefully.
  41. Thank You 41

  42. Appendix

  43. 2021- A Simple Asset Allocation Strategy to Deal with Market

    Cycles
  44. India’s Recent Reforms Will Drive Growth Financial • JAM Trinity

    • Fin-Tech • Payments • New Bank licenses Governance • Bankruptcy Code • Tax and legislative Reforms • Land & Labor India Inc. • FDI • Privatization • PLI • Tax cuts
  45. Second Wave is Serious

  46. Increase JABS to save JOBS In this exclusive webinar, Sorbh

    & Arvind will answer big questions like:  Has Covid Impacted India’s Long Term Growth Potential?  What Opportunities Does India’s Growth Story Create?  Are Equities The Best Way To Play India’s Long-Term Growth Story?