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QLTEVF

 QLTEVF

Where are the equity markets headed and how is the Quantum Long Term Equity Value Fund poised for growth? Find answers through the webinar presentation that take you through the fundamentals that drive the market rally and how investors benefit from the downside protection offered by a value fund.
www.Quantumamc.com

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Quantum Mutual Fund

September 21, 2021
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Transcript

  1. Quantum Long Term Equity Value Fund Speaker: Mr. Sorbh Gupta,

    Fund Manager – Equities 15th September 2021
  2. Economic Activity Gradually recovering Economic activity in most sectors are

    at similar or higher than pre Covid-19 level Source: CMIE Production Trends July 2021 as % of Feb 2020 Credit and Consumption Trends July 2021 as % of Feb 2020 Cement Production 92.9% Bank Credit 107.9% Steel Production 100.8% Bank Credit to Industry 101.1% Fertilizer Production 111.4% 2-Wheeler Sales 101.5% Coal Production 69.6% Passenger Car Sales 104.0% Crude Oil Production 106.3% Tractor Sales 117.7% Natural Gas Production 124.8% Air Cargo 96.7% Petroleum Refinery Products 94.8% Rail Freight traffic 105.8% Electricity Generation 116.5% Port cargo 90.2%
  3. 3 Corporate Profits at an all time High, Expectations of

    Strong Demand Rebound • Corporate profitability hit a record in Q4FY21 driven by strong revenue growth and strict control on costs . • Demand is expected to rebound post unlock driving sales, but higher input costs and normalizing other costs may see profit growth lag revenue growth Source: CMIE- Economic Outlook
  4. Demonetization, GST, Covid: Large Companies Getting Larger Source: CMIE- Economic

    Outlook, Data as of March 2021
  5. Consensus Earnings Upgrades After Many Years of Flat Growth Source:

    Bloomberg. As on 31thJuly 2021. Past Performance may or may not sustained in future.
  6. 6 Déjà vu : Is it 2005-08 or 2010-13 Corporate

    Earnings Liquidity Equity Valuations Equity Returns Rising Easy High Positive Rising Tight Moderate Slight Decline Stagnant/Falling Easy Moderate Slight Decline Falling Tight Falling Sharp Correction Most Likely Scenario, But Returns may moderate
  7. Value vs. Growth (2010-2019) Past Performance may or may not

    sustained in future.
  8. Value vs. Growth (2000-2009) Past Performance may or may not

    sustained in future.
  9. 9 ➢ Boom: – Real economic activity continue to revive

    & corporate earning upgrade happen • Real estate revives – stamp duty cut, lower interest rates spur real estate demand • Strong export growth in services & products as 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 2021 – Boom & Bust, Evenly Poised
  10. Indians Still Consuming: The Hungry Consumers! *2022 YTD data: Two-wheeler

    sales data as on July '21, Passenger Vehicle sales data as on July ’21, Refrigerator data as on June ’21, Cement sales data as on July' 21, Housing loans data as on July 2021, Source: 2 wheelers, Cement & passenger vehicle – CMIE database; refrigerator production data – CMIE (IIP) database; home loans outstanding – RBI Data on Sectoral deployment of Bank credit (August 2021). ** Annualized Returns Year (March end) 2-wheelers (Domestic sales Mn units) Passenger Vehicles (Domestic sales Mn units) Refrigerators (Production Mn units) Cement (mn tn) Home loans outstanding (Rs. bn) 2008 8,064,903 1.6 6.1 174 2,603 2009 8,439,786 1.6 6.7 187 2,794 2010 10,511,009 2.0 8.0 207 3,009 2011 13,302,335 2.5 8.7 216 3,499 2012 15,384,261 2.6 9.9 230 3,971 2013 15,753,563 2.7 11.1 248 4,567 2014 16,890,778 2.5 10.7 256 5,386 2015 18,433,027 2.6 12.0 270 6,285 2016 18,938,727 2.8 11.9 283 7,468 2017 19,928,958 3.1 13.1 280 8,601 2018 23,007,691 3.3 13.5 298 9,746 2019 24,460,688 3.4 15.6 337 11,601 2020 20,936,201 2.7 15.0 334 13,498 2021 18,397,111 2.5 11.2 294 14,591 2022 YTD * 5,171,828 0.8 2.1 110 14,668 CAGR (since 2008 till 2021) 6.5% 3.8% 4.8% 4.1% 14.2%
  11. India’s Economy May Grow >6% p.a. Real GDP growth rate

    across 10 governments has been 6.1% p.a. over the last 41 years 6.5% is a good long-term assumption; 8% is NOT a good long-term assumption! Source: RBI and www.parliamentofindia.nic.in as of March 2021. Note: The number in red rectangle is from a changed data series starting Jan 2015. While a “superior” series, there is no comparable number to equate the “New” with the “Old”. Most economists deduct 0% to 1.5% from the “New” to equate to the “Old”; therefore under Modi, the GDP has been at 5.9% at best matching the 5.6% under the BJP-led coalition government of Vajpayee that resulted in a rout for the BJP at the time of the next election in 2004!* Please note that data used for World GDP for 2017 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 May 2021.
  12. Don’t Be Distracted By Global Macro: Economic Activity Led To

    A 10x Growth In Earnings Source: CLSA and Bloomberg Finance L.P., as of August 31, 2021 CY 21 and CY 22 are estimate numbers Past Performance may or may not be sustained in future
  13. Quantum Long Term Equity Value Fund Scheme Objective: To achieve

    long-term capital appreciation by investing primarily in shares of companies that will typically be included in the S&P BSE 200 Index and are in a position to benefit from the anticipated growth and development of the Indian economy and its markets
  14. 14 ➢ 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 Quantum Long Term Equity Value Fund – A Must have Equity Diversified Fund
  15. 15 Our Investment Criteria: Value Evaluate: • The business of

    the company • The environment in which it operates • The management, and their long-term goals • Can the financials support the long-term goals? Analyze: • The stock price of the company based on fundamentals relative to its peer group, its history, and the market • PER, PCF, P/BV, Div Yld, EV/EBITDA Buy: • Current price is generally 40%+ lower than our estimate of long-term value (in case of first time buy) Sell: • Current price is > our estimate of long-term value. • Better Investment Alternatives. • Changed view of management, • Changed view of business
  16. 16 Our Macro Assumptions: The 4 Inputs To Our Bottom-up

    Stock Selection Process Our estimate Current readings Comments GDP, long-term 6.0% to 6.5% (Old Series) 1.6% (December 2020-March 2021) Strong recovery thwarted by Second wave. GDP growth for FY 22 to be lower at 9.8%. Income support crucial Inflation 5.0% to 5.5% 6.3% CPI inflation is likely to remain close to the RBI’s upper threshold of 6% in FY22. 10-year bond Long term: 7.0% to 7.5% Short term: 5.75%-6.25% 6.11% RBI managing bond yield curve with Bond purchases. However, inflation fear and potential policy normalization will likely put upward pressure on yields. FX rates +/-2% (INR /USD in a 73-78 band) INR/USD=74.5 RBI dollar buying at record pace to arrest INR appreciation. RBI has enough FX reserves to buffer any sharp depreciation Source: Quantum Advisors estimates, as of June 2021
  17. 233 stocks 25 to 40 stocks 597 stocks Quantum’s Bottom-Up

    Stock Selection Process Number of stocks mentioned are as per current average trading volume value criteria. The number of Stock in trading volume criteria, and in portfolio will be changed from time to time based on Investment Strategy of the scheme. Analysts study stocks in their sector (India) with global comparison, travel worldwide, prepare detailed projections. Regular research meetings to review ideas and approve stocks for the database. Consensus required. All stocks are reviewed time to time generally within 180 days. We must trust the managements/founders Number of companies trading over US $1 million/day Portfolio of stocks with broad exposure to various sectors. Approved by the portfolio team Reflects three broad themes: domestic consumption, exports and infrastructure PORTFOLIO VALUE AND INTEGRITY SCREENING ADDRESSABLE UNIVERSE Clients get best of bottom-up ideas with a risk control measurement for each sector Generally, < 20% of the stocks we cover meet our “Buy” criteria
  18. Portfolio Construction Portfolio of 25-40 stocks Part of S&P BSE-30

    Index? Below Buy limit? What sector? Stock under active coverage? Volume INR 6.98 Crs per day Minimum wt 2% at cost Maximum wt 6% at cost Maximum wt 10% at market value YES YES No effect on decision Indifferent; guided by Research Investment Rules To research team Wait Weights assigned to a stock are a function of: 1) Reliability of management 2) Quality of earnings 3) Stability of earnings 4) Upside Potential 5) Alternatives/Cash Our portfolio turnover is typically 20%, suggesting a 5 year holding period. Please refer Scheme Information Document of the Scheme for complete Investment Strategy No No
  19. 19 Eicher Motors: Valuations Signaled Optimal Entry Point Stocks referred

    above are illustrative and not recommendation of Quantum Mutual Fund/AMC. The Fund may or may not have any present or future positions in these Stocks. The above information of stocks which is already available in publically access media for information and illustrative purpose only and not an endorsement / views / opinion of Quantum Mutual Fund /AMC. The above information should not be constructed as research report or recommendation to buy or sell of any stocks. Past Performance may or may not be sustained in future. Source: www.screener.in
  20. 20 Idiosyncratic Risk Of Owning Reliance Group Disclaimer: Stocks referred

    above are illustrative and not recommendation of Quantum Mutual Fund/AMC. The Fund may or may not have any present or future positions in these Stocks. The above information of stocks which is already available in publically access media for information and illustrative purpose only and not an endorsement / views / opinion of Quantum Mutual Fund /AMC. The above information should not be constructed as research report or recommendation to buy or sell of any stocks. Past Performance may or may not be sustained in future. Note: Data as of Sep 13, 2021 , Source: Google finance
  21. 21 Portfolio Reflects Value QLTEVF As % Of S&P BSE-30

    Index S&P BSE-30 Index** Number of equity stocks 28 30 Median market capitalization (USD mn) 12,480 36% 34,322 Weighted dividend yield 1.3% 138% 1.0% Weighted PER: March 2023E 14.3x 67% 21.2x Weighted EPS Growth: March 2023E 21.7% 95% 22.8% PEG Ratio (excludes cash) 0.66x 71% 0.93x T12M PE 24.1x 59% 40.5x Weightage of stocks with PER > 20 65% 88% Weightage of stocks with PER > 30 50% 69% Source: Quantum AMC As of August 31, 2021| QLTEVF - cash weight excluded | ** S&P BSE-30 Index weight is based on free-float. % S&P BSE 30 Index column depicts the QLTEVF as a percentage of S&P BSE 30 Index fundamentals. The figures mentioned in WTD PER, WTD EPS and PEG ratio are calculated on the basis of Bloomberg consensus estimates for companies owned by the Composite as well as the companies in the S&P BSE 30 as of the reporting date i.e. August 31, 2021. Past Performance may or may not be sustained in future.
  22. 22 Avoid switching/redeeming to alternatives with myopic outlook Disclaimer: Past

    performance may or may not be sustained in future. The above data should be reviewed in conjunction with detailed performance of the scheme provided on slide number 27 Note: Data as on Aug 31,2021 Source: Monthly Factsheet - Aug 2021, www.gold.org for Gold returns 545,739 659,420 667,000 769,500 - 100,000 200,000 300,000 400,000 500,000 600,000 700,000 800,000 900,000 Gold S&P BSE Sensex TRI S&P BSE 200 TRI QLTEVF Pre-tax amount of INR 1 lakh invested at inception
  23. Performance across the market cycles - (Mar 2006 – August

    2021) Data as on 31st August 2021. Past performance may or may not be sustained in future. This graph should be reviewed in conjunction with detailed performance of the scheme provided on slide number 27 Source: Bloomberg
  24. 24 ➢ Portfolio tuned towards cyclicals (Large Banks, NBFC &

    Consumer discretionary) as the benefit the most from economic recovery. IT stocks in the portfolio benefiting from a global uptick in tech spends. ➢ Business shift towards larger companies amidst economic turmoil is adding tailwind to our investee companies. Our 74% allocation is towards large caps & 20% towards mid caps. ➢ 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 Portfolio Outlook
  25. 25 Risks to the Recovery Low Vaccine coverage increases probability

    of a third wave. Festive season to start from Sep 2021 Job Losses amongst salaried employees and Rising Inflation may impact consumer discretionary spend Since the pandemic began, there has been a reduction in number of employed by 20 million Inflation in Raw materials and increase in Crude prices may force RBI to raise interest rates
  26. Risk-Return Equity +Debt +Gold * Equity + Debt ** Equity

    Debt Gold CAGR 11.29% 11.43% 13.28% 7.20% 11.22% Annualized SD 9.37% 13.47% 22.06% 3.27% 17.32% VAR -15.46% -22.23% -36.39% -5.39% -28.58% Maximum Drawdown 0.21 0.36 0.56 0.06 0.25 Sharpe Ratio 0.541 0.387 0.320 0.301 0.289 Portfolio Impact of Diversification If you compound your money at 12% per year you are better off than an investor who makes 25% in one year and loses 20% in the next The most diversified strategy yields similar returns with the lower volatility, compared to a pure equity strategy 26 Time frame is November 2004 to August 2021. The period is taken from 2004 since the asset allocation weights are calculated based on normalizing the historical monthly equity and debt indicators. Given the normalization time frame used in the strategy, data availability for certain parameters beyond the time frame analyzed was a constraint. Compiled by Quantum AMC *Equity-Debt-Gold in ratio of 40-40-20. **Equity-Debt allocated in 60-40 range Based on Sensex Index, Crisil Composite Bond Fund Index, and Domestic Gold Prices Note: Past performance may or may not be sustained in the future
  27. Performance of Quantum Long Term Equity Value Fund – Direct

    Plan – Growth Option Period Current Value of 10,000 Invested at the beginning of a given period Benchmark* Additional Benchmark Benchmark* Additional Benchmark Scheme Returns (%) S&P BSE 200 TRI (%) S&P BSE Sensex TRI (%) Scheme (Rs) S&P BSE 200 TRI (Rs) S&P BSE Sensex TRI (Rs) 1 year 56.50% 55.45% 50.55% 15,650 15,545 15,055 3 years 11.34% 14.96% 15.49% 13,805 15,198 15,412 5 years 10.91% 15.82% 16.48% 16,790 20,853 21,451 7 years 11.35% 13.93% 13.00% 21,251 24,953 23,572 10 years 14.27% 15.15% 14.72% 38,000 41,064 39,529 Since Inception (13th Mar 2006) 14.09% 13.04% 12.96% 76,950 66,700 65,942 Past performance may or may not be sustained in the future. Load is not taken into consideration in scheme returns calculation. Data as of 31st August 2021 Returns are calculated on the basis of Compounded Annualized Growth Rate (CAGR). *with effect from February 01,2020 benchmark has been changed from S&P Sensex TRI to S&P BSE 200 TRI. As TRI data is not available since inception of the scheme, benchmark performance is calculated using composite CAGR S&P BSE 200 index PRI Value from March 13, 2006 to July 31, 2006 and TRI Value since August 1, 2006 For performance of other Schemes Managed by Mr. Sorbh Gupta please see slide number 31 and for performance of other Schemes Managed by Mr. Nilesh Shetty please see slide 31 The Scheme is co-managed by Mr. Sorbh Gupta and Mr. Nilesh Shetty. Mr. Sorbh Gupta is the Fund Manager effective from December 1, 2020. Mr. Nilesh Shetty is the Fund Manager effective from March 28, 2011.
  28. Other Schemes managed by Sorbh Gupta and Nilesh Shetty Quantum

    Tax Saving Fund Mr. Sorbh Gupta is the Fund Manager effective from October 1, 2016. Past performance may or may not be sustained in the future. Data as of 31st August 2021 #S&P BSE 200 TRI. With effect from February 01,2020 benchmark has been changed from S&P Sensex TRI to S&P BSE 200 TRI. Returns are net of total expenses and are calculated on the basis of Compounded Annualized Growth Rate (CAGR). Mr. Sorbh Gupta co-manages 2 scheme of the Quantum Mutual Fund. Quantum Multi Asset Fund of Funds Mr. Chirag Mehta and Mr. Nilesh Shetty are Fund Managers effective from July 11, 2012. Past performance may or may not be sustained in the future. Load is not taken into consideration in Scheme Return Calculation. Data as of 31st August 2021 #Benchmark has been changed from Crisil Composite Bond Fund Index (40%) + S&P BSE SENSEX Total Return Index (40%) + Domestic price of gold (20%) to CRISIL Composite Bond Fund Index (20%) + S&P BSE Total Return Index (40%) + CRISIL Liquid Index (25%) + Domestic Price of Gold (15%) with effective from April 01, 2021. It is a customized index and it is rebalanced daily Returns are net of total expenses and are calculated on the basis of Compounded Annualized Growth Rate (CAGR). Mr. Chirag Mehta manages 5 schemes of the Quantum Mutual Fund. Mr. Nilesh Shetty manages 2 schemes of the Quantum Mutual Fund. Period 1 year 3 years 5 years Scheme Returns (%) Benchmark Returns (%) # Scheme Returns (%) Benchmark Returns (%) # Scheme Returns (%) Benchmark Returns (%) # Quantum Tax Saving Fund- Direct Plan (Gr) 56.15% 55.45% 11.30% 14.96% 11.03% 15.82% Quantum Tax Saving Fund- Regular Plan (Gr) 55.39% 55.45% 10.80% 14.96% N.A. N.A. Period 1 year 3 years 5 years Scheme Returns (%) Benchmark Returns (%) # Scheme Returns (%) Benchmark Returns (%) # Scheme Returns (%) Benchmark Returns (%) # Quantum Multi Asset Fund of Funds*–Direct Plan (Gr) 13.75% 18.69% 9.51% 12.65% 8.57% 11.41% Quantum Multi Asset Fund of Funds*–Regular Plan (Gr) 13.33% 18.69% 9.23% 12.65% NA NA
  29. Product Label

  30. 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. 15th September 2021 Mutual fund investments are subject to market risks, read all scheme related documents carefully.
  31. Thank You 31