How Quant AMC Mutual Fund Schemes are outperforming across categories?

If you are a mutual fund investor, first thing you check is which mutual funds that are generating higher returns in the short term, medium term and long term and whether your fund is part of that list or not. What if you see a particular mutual fund AMC is topping its mutual fund schemes across various categories? This is what is happening with Quant AMC mutual fund schemes. Whether you see small-cap category or mid cap category or active fund category, this AMC’s funds are topping the charts. There are front running allegations against Quant AMC recently which are being investigated by SEBI now. However, every MF investor should try to understand the math and methodology on how a AMC is able to outperform their schemes compared to its peers. In this article we would try to analyse How Quant AMC Mutual Fund Schemes outperforming across categories and any specific unique investment strategy they are following now.

About Quant Asset Management Company (AMC)

Before we get into what is really working for this AMC mutual fund schemes, let us understand more about this mutual fund house.

This is a young mutual fund AMC that came into existence in 2018 i.e. 6 years back. It acquired Escorts Mutual Fund in 2018 which was managing around Rs 200 Crores of AUM. After acquisition, till Mar-2020 it was managing around Rs 130 Crores of AUM only. As per ET, Quant AMC AUM is Rs 93,000 now across 27 schemes (21 equity schemes, 1 debt scheme, 3 hybrid schemes and 2 money market schemes and with regular/direct and growth/dividend etc. Options).

What are Front Running allegations against Quant AMC?

Few days back, SEBI did search operation at Quant mutual fund offices due to front running allegations in their mutual fund schemes.

Front Running in stock market occurs where a broker or individual or a fund manager executes trades in their own account before executing it for their clients. With such advance information available, one can easily make money in the short term. Front Running is illegal in India.

You can check this article if you missed about it – Quant AMC Front Running Allegations and what investors can do now.

Why Quant AMC Mutual Fund Schemes Outperforming Across Categories

Quant AMC Mutual Funds (Excl Sector/Thematic Funds) – Performance in the last 3 to 10 Year

Lets check Quant AMC mutual funds that are existing in the last 10 years and their 3 to 10 year performance.


3 Years 5 Years 10 Years
Quant ELSS Tax Saver Fund 29.0% 35.4% 25.9%
Quant Active Fund 27.0% 32.2% 22.3%
Quant Large and Mid Cap Fund 31.6% 29.4% 22.0%
Quant Small Cap Fund 34.0% 44.0% 22.2%
Quant Mid Cap Fund 35.0% 37.2% 22.0%
Quant Flexi Cap Fund 28.0% 34.1% 21.5%
Quant Focused Fund 24.5% 25.2% 20.2%

If you observe, Quant mutual funds have outstanding performance and generated over 20% annualised returns in the last 10 years. As indicated in my previous article in 7 High Return Mutual Funds where I am investing now in 2024, it has Quant Midcap and Quant Smallcap Funds too. This AMC is following similar investment strategy across schemes, and it is working out well for them.

What is the Investment Framework adopted by Quant AMC Mutual Fund Schemes?

Quant AMC mutual funds adopt a V-L-R-T Investment Framework i.e. Valuation, Liquidity, Risk-Appetite and Time.

Valuation – Knowing the difference between the price and value

Liquidity – Understanding the flow of money across asset classes.

Time – Being in sync with the waves of Value and Behavior

Risk Appetite – Perceiving what drives market participants to certain actions and reactions.

Its unique analytical framework for enabling ‘predictive analytics’ encompasses all available asset classes and sectors, formulating a multi-dimensional research perspective.

We have observed that Quant AMC mutual funds have a high turnover ratio, i.e. They do not hold stocks for the long term. As an example for Quant Active Fund had more than 70% of the stocks that moved out their top-10 holdings in 6 months time frame itself. Its turnover ratio was 500% in the 1 year in 2023. They do not believe in Buy and Hold Strategy. We could see similar strategies and high turnover ratio across Quant AMC mutual fund schemes.

Do Risk Metrics tell something special about these funds?

Lets analyse some of the risk metrics.

#1 – R-Squared

This measure funds performance to benchmark index performance. 1 means the fund closely replicates the underlying stocks of the index.

As an example Quant midcap fund R-Squared metric is 0.76.  Means it it far away from replicating the benchmark index which should be the ideal scenario for active funds. If they are replicating an index, investors as well invest in index funds rather than active fund.

Another example is about Quant Active Fund which is multicap fund that has R-Squared of 0.7 which is the lowest among multicap funds and indicate that it is far away from replicating the index.

It net summary they are far away from replicating the stocks under the particular index.

#2 – Standard Deviation

This indicates the fund’s volatility.

Majority of the Quant AMC mutual funds have high standard deviation. Means these are highly volatile compared to others. There could be positive or negative returns  with ups and downs. In future if there is huge stock market correction, we can see huge fall in NAV of their schemes. It is exactly opposite to what we indicated in the article 6 High Return Low Risk Mutual Fund in 2024 which are classified as low risk by Value Research.

Conclusion: Quant AMC mutual fund schemes have been outperforming in respective category of mutual funds due to its unique investment framework i.e. VLRT. Unlike other funds which invest based on growth, valuation, momentum stocks, special situations, these funds have a clear investment strategy which does not fit into the buy and hold strategy. We do not know how long such unique strategies would work for this AMC, however currently these are working well for them. I am personally along with my family members investing in their mutual fund schemes too.

While front running allegations have come against this AMC, all their schemes have been outperforming compared to its peers till now. Investors need to wait and watch till SEBI concludes their investigation before taking a decision to invest more / continue existing investments /  exit from the funds. In case such investigation is taking lot of time and if we are able to see drastic drop in the performance in the mutual fund schemes in the coming months, investors should quickly review and take decision about such investments.

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