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Debt Funds for investors

Debt Funds for investors

Pankaj Pathak, Fund Manager, Fixed Income, Quantum Mutual Fund will share insights about the current Debt Market and answer questions like, what role do debt investments play during uncertain times, why is it important for investors to consider Debt mutual funds and build an emergency corpus?

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Quantum Mutual Fund

May 03, 2021
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Transcript

  1. Speaker: Pankaj Pathak Fund Manager – Fixed Income April 26,

    2021
  2. Interest Rates at Historic Lows Source – Bloomberg; Quantum Research,

    Data as of 31st March 2021 Past performance may or may not sustained in future 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 10-Year G-Sec Yield 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 3-Months Treasury Bill Yield
  3. Dilemma of Fixed Income Investors What to do to Generate

    Higher Returns? Should one move to Longer Duration Fund categories? Should one move to Credit Funds? High Returns come with High Risk
  4. Why do we need Fixed Income in our Portfolio? Liquidity

    Income Diversification
  5. Long Duration Funds are for Longer Period 0.0% 2.0% 4.0%

    6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Crisil Composite Bond Index 1 year Return 3 Years Annualised Return Source – Bloomberg, Quantum Research, data as of 31st March 2021 Past performance may or may not sustained in future
  6. Credit Risk…??? • credit defaults causes permanent damage to portfolio

    Losses Are Generally Non- Recoverable • stress in a small pocket can cause system wide problem Contagion Risk • difficult to sell to meet heavy redemptions or churn portfolio Illiquidity • upside is limited but downside could be severe Unfavorable Risk Returns Dynamics • Low grade debt tends to struggle in slow economy & weak equity markets No Diversification
  7. The Pandemic Made it more Fragile… What do Headlines Say?

    Source- Newspapers
  8. What is the Way Out???

  9. Presenting a Barbell Strategy combining Safety First Approach of Quantum

    Liquid Fund with Active Duration Management of Quantum Dynamic Bond Fund
  10. Quantum Liquid Fund – Stands Out ALWAYS Prioritize Safety over

    Returns Zero Private Corporate Debt Invests only in Government Bonds, Treasury Bill or AAA rated PSUs Low Credit Risk = Low Liquidity Risk A reasonable portion of portfolio in cash or overnight asset
  11. Our Safety First Approach IN ACTION

  12. The IL&FS Crisis (2018) Our Safety First Approach works –

    even in unprecedented times. We remain committed to it! •IL&FS carried AAA Credit Rating at the time of default •Funding stopped for many Private Companies (even AAA rated) post IL&FS •Our investment process ensured that companies like IL&FS could never become part of Quantum Liquid Fund •Quantum Liquid Fund remained unscathed during the entire credit crisis triggered by the IL&FS debacle
  13. The Covid-19 Crisis Our Safety First Approach works – even

    in unprecedented times. We remain committed to it! •Some of the Debt Funds were not able to meet redemptions as liquidity dried up •Quantum Liquid Fund did NOT need the RBI’s liquidity window to meet redemptions •Even though no one could have predicted the pandemic, the safety first approach at Quantum Liquid Fund helped us sail through it
  14. Active Duration Management Quantum Dynamic Bond Fund If interest rate

    expected to rise Focus on protecting value Invest in short term securities to make the portfolio less sensitive to rising interest rate If interest rate expected to go down Focus on capital appreciation Invest in long term securities to which gain more when interest rate falls In all market conditions fund maintains credit risk at minimal levels by not investing in any Private Credit
  15. In Conclusion… Safety First is the ONLY sensible approach to

    take for your cash balances Ride through the uncertain interest rate environment by having longer tenor Chasing the maximum possible return carries risk you do not want to take on Prudence is in lowering your returns expectation closer to market reality
  16. Product Label

  17. Disclaimer – Terms of Use For AMFI/NISM Certified partners only.

    For private circulation only. 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. 26th April 2021 Mutual fund investments are subject to market risks, read all scheme related documents carefully.
  18. Thank You 18