scorecardresearchQuant Small Cap Fund: Should you invest in it?

Quant Small Cap Fund: Should you invest in it?

Updated: 01 Jun 2023, 12:29 PM IST

Quant Small Cap Fund has managed to beat the benchmark and category average in both trailing and rolling returns over the past three years, although it comes with a higher risk due to its high turnover ratio and quant-based investment approach.

Quant Small Cap Fund

Quant Small Cap Fund

Thanks to the superb performance of the various funds, Quant Mutual Fund has become one of the most talked about mutual fund houses in the current scenario. Quant Mutual Fund is not a new fund house. Quant Capital acquired Escorts Mutual Fund in 2018. Today, we will be talking about one such fund, i.e. Quant Small Cap Fund.


When Quant Capital acquired Escorts, Escorts Income Bond Fund naturally became Quant Income Bond Fund. And this debt fund was later changed to Quant Small Cap Fund. The change came into effect on 20th October 2018.

So, although you can see the fund’s performance from January 2013, we can only see the true performance of the fund from October 2018.

Let us check the fund’s performance as we are now aware of the backdrop of the fund.


To check the performance of the fund, we will consider the direct growth option of the fund. We will see the fund’s trailing returns and rolling returns against its peers and benchmark.

We are not taking a timeline greater than three years as the fund has not yet completed five years of being a small cap fund.

If we look at the one-year and three-year returns, we can see that the fund has managed to beat the benchmark and the category average by a comfortable margin.

Trailing Returns1 year3 year 
Quant Small Cap Dir 20.1466.19
S&P BSE 250 Small Cap TRI 11.5942.06
Equity: Small Cap 12.7 43.55
Rank within category 51

Data as of 8th May, Source: Value Research

It was the top-performing small cap fund from a three-year horizon with a 66.19% CAGR.

Now, let us look at the rolling returns. Trailing returns have recency bias, meaning that the near-term events impact recent performance. So, rolling returns present a holistic picture as it averages out the returns generated by the fund.

Let us see the rolling returns on a one-year rolling return period against its benchmark and category average.

Scheme/ Category Name Average Median Maximum Minimum 
Quant Small Cap Fund- Growth Option- Direct Plan 51.2018.27222.83-41.58
NIFTY SMALLCAP 250 TRI 28.557.69135.79-41.4
Equity: Small Cap 29.2211.51117.86-31.87

Data as of 4th May, Source: Advisorkhoj

So, we have seen that the average rolling return of the fund is greater than the category and benchmark. We can also see that the fund’s maximum return is substantially higher than the category average and the benchmark. However, the minimum return was also less than the category and benchmark. It means although the fund has a greater upside, it also comes with a higher risk.

This stunning performance has helped the fund garner assets. The assets under management (AUM), which is the value of the assets managed by the fund, was Rs. 1.17 crores as of 31st October 2018. The AUM currently stands at 4091.51 crores as on 30th April 2023, a whopping 349602% increase in assets.

The fund is currently managed by Ankit Pande, Vasav Sahgal and Sanjeev Sharma.


Their unique investment approach makes Quant Mutual Fund different from other funds in the category.

They employ ‘predictive analytics’ that considers asset classes and sectors to formulate a multi-dimensional research perspective. Their investment style focuses on Valuation, Liquidity, Risk Appetite and Time (VLRT).

As a result of their quant-based model, the fund has a high churn rate in the portfolio. The fund has a higher turnover ratio of 87%. This means that a percentage of the portfolio that was changed within one year. If we compare its peers, such as Nippon India Small Cap and SBI Small Cap, these funds have a lower portfolio turnover ratio of 24% and 9%.

Investing in stocks that were likely to perform better has helped the fund to perform better than other small cap funds.

The recent increase in the returns can be attributed to their exposure to large cap stocks such as Reliance, HDFC Bank and ITC with 8.66%, 7.91% and 5.47% allocation to the fund. According to Value Research data, the fund has increased its holdings in Reliance, HDFC Bank and Bikaji Foods International in the last nine months.

From a sectoral perspective, the fund has the highest allocation of 18% in the banking sector. Overall, the fund has a higher total allocation to financials at 21.15%, while Nippon India Small Cap and SBI Small Cap have an allocation of 12.90% and 8.70%, respectively.

However, despite the high churn ratio, the expense ratio of the fund’s direct plan stands at an average of 0.62%. The expense ratio is the percentage of its assets that goes into managing the fund. The fund returns are calculated after subtracting the fund’s expense ratio.

So, overall, if we look at the fund’s performance, it has been a top-performing fund in the small cap fund category. However, it also comes with a higher risk.

Padmaja Choudhury is a freelance financial content writer. With around six years of total experience, mutual funds and personal finance are her focus areas.


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First Published: 01 Jun 2023, 12:29 PM IST