Why Quantum Mutual Fund is not a mutual fund - The Honest Truth By Ajit Dayal
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Investing in India - Honest Truth by Ajit Dayal
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27 SEPTEMBER 2010


Technically and legally, Quantum Mutual Fund is a mutual fund.
We are governed by the laws of the regulator, SEBI.
We have the structure of a mutual fund, including a Board of Trustees that ensures we don't fool around with the savings of investors like you.

------------------------------------ 'The Honest Truth' now in Hindi also ------------------------------------
आपके पसंदीदा लेख अब आपकी भाषा में भी.
यहाँ पढ़िए.
क्या इस हिंदी अनुवाद में वही बात थी जो अजीत के मूल अंग्रेजी लेख में होती है?
इस हिंदी अनुवाद पर अपनी प्रतिक्रियाएं हमें ज़रूर बताएं.

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We have fund managers, we have research analysts, we have an operations team, we have a legal and compliance team, we have an investor servicing team, and we have a marketing and sales team. And we have a CEO who heads all of that.

But, yet - the thought struck me a few days ago - Quantum Mutual Fund is not a mutual fund.

So, if Quantum Mutual Fund has this "mutual fund" thing around us - all these features that other mutual funds also have - why is it that we are not a mutual fund?

Is a mutual fund an end in itself?
The difference between us and many mutual funds out there may be in the simple notion that we don't see the mutual fund as a "business" - we did not launch products for the sake of launching products.
Well, I know that Quantum Mutual Fund has only 6 products: we believe in the simplicity of investing. We believe that the act of investment has to be simple and easy to understand.
One must know the forest.
One must recognise the trees that make up the forest.
But does one have to sell you a leaf - no millions of leaves - and make you pile them into your monthly fund statements so that you have the comfort that you own a forest?

No, that's what mutual funds tell you to do.
That's not what Quantum Mutual Fund advises its investors to do.

Table 1: Why Quantum Mutual Fund is not a mutual fund in the way you know it.
Questions to ask: Quantum Mutual Fund Describe any other mutual fund here
How many products have been launched? 6  
Did they pay distributors commissions? No  
Are we in the business of gathering AuM No  
Is track record everything? Yes  
Are we in the business of investing? Yes  

We refused to pay distributors commissions which enabled them to dump you with products you don't need.
Yes, before the emails come in reminding me of the "good distributors", I agree that there are many good distributors out there.
But, how many "good" mutual funds are there that refused to pay their distributors any commission? How many mutual fund companies did not mind being branded as "small" because of the size of their assets under management?
As is now well documented and known, Quantum Mutual Fund refused to play this "dump-your-product" game via the well-oiled distribution machinery. Nope, we did not believe in this unethical practice of paying distributors money from your savings so that we could grab a higher share of your wallet. Nope, Quantum Mutual Fund does not have a "share-of-wallet" concept in our business discussions at the management level or at the Board level. We don't have a market share objective.

How many "good" mutual funds are there which were willing to build a track record which should, effectively, determine whether you invest your savings with them or not?
What Quantum Mutual Fund has done - for every product - is ensure that there is a solid research and investment process that results in a track record. And, if that track record is good, then we believe that investors will make the sensible decision of investing their savings with us. If our track record is not good, then we do not deserve your savings.

How many mutual fund companies placed an advertisement which said that "investors looking to double your money in the short term should not invest in this Fund" or words to that effect? How many mutual funds tell you "don't give me your money, because we don't deserve it"?
Well, the few advertisements we released in the year 2006 said we were not keen on having speculators invest in the Quantum Mutual Funds.
And I have often said that if our track record (not to be confused with "ranking") is disappointing, we don't deserve your savings.

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No, Quantum Mutual Fund is not a mutual fund
All that Quantum Mutual Fund is is really an avenue for long term investors to place their savings in simple products for sensible risk-adjusted returns.

And, to top it all, it is our objective to reduce your costs so that more of your money works for you in the stock markets, the fixed income markets, or in gold.

And, yes, we do have those 5-star rankings that everyone advertises.
But, not being a mutual fund, Quantum Mutual Fund focuses on the comfort of your savings, not on our rankings.

So, what do you think?
Is Quantum Mutual Fund one of the 50-plus mutual fund houses out there?
Or are we something else? Please Vote
As the "founder" of Quantum Mutual Fund I know that Quantum Mutual Fund is a place where you can invest your savings knowing that we have always focused on what is right and ethical, and tried to give you sensible risk-adjusted returns.


Suggested allocation in Quantum Mutual Funds (after keeping safe money aside)
Quantum Long Term Equity Fund Quantum Gold Fund
(NSE symbol: QGOLDHALF)
Quantum Liquid Fund
Why you
should own
it:
An investment for the future and an opportunity to profit from the long term economic growth in India A hedge against a global financial crisis and an "insurance" for your portfolio Cash in hand for any emergency uses but should get better returns than a savings account in a bank
Suggested allocation 80% 20% Keep aside money to meet your expenses for 6 months to 2 years

Disclaimer: Past performance may or may not be sustained in the future. Mutual Fund investments are subject to market risks, fluctuation in NAV's and uncertainty of dividend distributions. Please read offer documents of the relevant schemes carefully before making any investments. Click here for the detailed risk factors and statutory information"


Disclaimer: The Honest Truth is authored by Ajit Dayal. Ajit is a Director at Quantum Advisors Pvt. Ltd and Quantum Asset Management Company Pvt. Ltd. The views mentioned above are of the author only. Data and charts, if used, in the article have been sourced from available information and has not been authenticated by any statutory authority. The author, Equitymaster, Quantum AMC and Quantum Advisors do not claim it to be accurate nor accept any responsibility for the same. Please read the detailed Terms of Use of the web site. To write to Ajit, please click here.


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23 Responses to "Why Quantum Mutual Fund is not a mutual fund"

sindhukumar

Jun 20, 2013

Quantum is the only fund other than Tax savers allows us to invest 500 as minimuma pplication amount. I likes this , becoz it allows me to do a SIP like investing either daily or weekly (even monthly)myself based on fund availability.

Like (2)

Maaran

Jan 19, 2011

How do you think people in small towns of India who can't afford computers/internet get access to equity markets? - These evil distributors you are talking about.

If you really were far & away the best performing mutual funds, people should flock to you. When there aren't much differences in terms of returns between 2-3 mutual funds, I am going to pick the one that is the easiest to access. At the moment, that is not Quantum MF.

Whether or not to use a distributor for your mutual funds is your business decision & choice. Berating other mutual funds for choosing to do as "unethical" is downright silly.

Like (4)

Hemal

Oct 12, 2010

Equitymaster team, are you mad ?
Why don't you self trumpet your performance ?
As per the moneycontrol site you are among the top ten performers for the last 3 years.

You have consistently beaten the index for last 3, last 2 and last 1 year.
What else proof is required ?

You people don't know how to sell, but then precisely thats what you are - not just sellers but achievers.


Note: I tried putting up the moneycontrol/valueresearch link, but your system doesn't allow urls

Like (2)

sundara ram

Oct 3, 2010

Dear Shri Ajit Dayalji,

I am a regular reader of your article. I understand your honesty in presenting facts. When NBFCs and Benefit Funds fall several lakhs of people lost their hard earned money,savings. The pathetic condition of Aged pensioners, who lost their life savings, is still there. so many committed suicide. Those NBFCs and Benefit Funds offered highest rate of interest for FDs and offered Brokerages and commissions . All functioned in fully air-contioned luxurious sophisticated offices. All become MAYAJAAL oneday. Several years gone. Even the principal amount is not paid to investors. I understand the care you are taking on investors money savings. Future will tell how honest your views and actions. God bless you for the honesty in serving the society and people. Thanks. Even if you tell thousands of times more about your stand and Quantum views of investing, it is not sufficient. It has not reached several sections of society. Your Yatra should continue every year. Yes It is NOT MUTUAL FUND, YOU ARE CORRECT -in what way others are doing. QUANTUM IS A HONEST MUTUAL FUND.

Like (2)

Anuj Gupta

Oct 1, 2010

All the talk of care and savings is fine but lets talk numbers, where are the returns? Dayal carefully does not show any numbers on returns. The fund languishes compared to both other funds as well as benchmark indexes like say Sensex. Why risk such high exit load for this empty talk, invest in index funds.
Quantum is a failure, even PSU funds perform better than it.

Like (4)

Srinivasan

Sep 29, 2010

Dear Ajit,

I am invested in your fund and so is my spouse.

But, this constant "other MF bashing" regarding their business practices is sickening. I suggest you head the SEBI and tighten the screw the way you want.

In the meanwhile, can we have other interesting investing articles on the Honest Truth. I am sure you will find in scores.

Kind Regards

Like (3)

Srinivasan

Sep 29, 2010

Actually this is for those who have difficulty investing in Quantum due to various reasons.

The easiest one now is to register with Fundsindia.com. Visit the site, the rest would be easy.

Kind Regards

p.s. the site is available for investing in other funds too.

Like (2)

V.Balkrishnan

Sep 29, 2010

Your article on"Why quantum Mutual Fund is not a mutual fund" is a honest truth.

Like (2)

Carl

Sep 29, 2010

I want to invest in your Long term equity fund. How do I go about it.

Like (2)

R.V.Iyengar

Sep 29, 2010

Dear sir,
I find you very matter of fact, in your approach and I like it. I am generally a Long Term investor and your philosophy is appealing .

Like (2)
Equitymaster requests your view! Post a comment on "Why Quantum Mutual Fund is not a mutual fund". Click here!