"An ant cannot destroy an elephant" - The Honest Truth By Ajit Dayal
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Investing in India - Honest Truth by Ajit Dayal
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25 OCTOBER 2012


Our fate is sealed.

All that Quantum Mutual Fund has worked for has come to an end.

The Law Minister, Salman Khurshid, in a "free-wheeling" interview has reportedly said, "He (Kejriwal) is too small...Pathetically small to be in confrontation with our party. An ant does not destroy an elephant...A hundred ants in an elephant trunk will not hurt an elephant." (Source: Zee News.com)

So, here we are, the ant of the mutual fund industry - six and a half years after the launch of India's first (and only!) direct-to-investor fund house and our elegy is being sung by someone as powerful as a Law Minister.

Of course, unlike Mr. Kejriwal, we don't have any land scam charges (or mangoes) to be thrown at those who live in - and allegedly prosper from - banana republics.

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Quantum Mutual Fund is the ant

No, as we explained in our fable "The Ant and The Elephant" the proposition of Quantum Mutual Fund was simple.

Quantum Mutual Find refused to be part of a system controlled by distributors of financial products which even the legendary and respected names of HDFC and Tata were willing to be a part of.

As a large distributor had said dismissively: "the elephants in the mutual fund industry dance to our tune - and you are only an ant!"

But, regardless of the power of the distributors - and the willing complicity of even the giant elephants to keep investors in the dark as they invested in mutual funds - we marched on diligently.

Our proposition was simple:

  1. Build a fund house that works for the investor by keeping costs low - and fully disclosed,
  2. Focus on simple products with full transparency of the investment process, Ensure that investors park their hard-earned savings across asset classes, and
  3. Stress on the need of the investor for thinking about the long term and avoid speculation.
So, the journey of the ant began with our first "NAV calculated" on March 13, 2006.

At the time of the launch of the Quantum Long Term Equity Fund, we had 760 investors with a total AuM of Rs 10.57 crore.

As of September 30, 2012, we have 11,570 investors in the Quantum Long Term Equity Fund with a total AuM of Rs. 132.19 crore. (We have 27,731 investors across all our 7 products with a total AuM of Rs. 248.58 crore as of September 30, 2012). Click here to see the performance of Quantum funds.

Not bad for the silent, hard-working ant.

We have not had the media shoving microphones into our faces though they have been sympathetic and some have, indeed, been fans.

But Kejriwal the ant is a household name.

Quantum Mutual Fund the ant is not a household name - but, happily, it does stand out for its low costs and decent performance.

The mutual fund industry is losing folios, losing assets, and losing investors.

Quantum Mutual Fund is adding folios, gaining assets, and winning the hearts of investors. We thought we were doing pretty well - despite these missiles that come our way once in a while from the elephant herd and from their driver mahouts, the powerful distributors.

But now, judgement has been passed: the ant cannot dislodge the elephant. It is final - no discussion.

Oh, well. Maybe it is time to dance like the timid elephant and surrender our souls for the trophy of market shares, inflated salaries, and indecent bonuses - all from your wallet, of course!

So, what do you think?

Should we shut shop and start calling up the distributors and bowing down to their opaque distribution models? Should we join the elephant herd?

Or should we keep working diligently as the only fund house that seems to have the interest of the investors as the core of every action - even if it means we remain small?

Remember the ants can only win if they stay together and work together.

A hundred ants may not bring an elephant and the mahout down, but one ant supported by a million enraged investors can change the industry - and finally see the creation of a fair and transparent system which allows local Indians to put their savings to work without the fear of being molested and terrorised.

But, then again, the resourceful Congress has a quote for terrrorism, too: "badey, badey shahar mein chotein chotein baaten hotey hai".

Option 1: "Go on fighting, my wonderful ant for we the mango people will support you!"

Option 2: "We the mango people love being duped and kept in the dark. Wipe out the troublesome ant!"

Click here to tell us which option you would like to go in for.

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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146 Responses to ""An ant cannot destroy an elephant""

K.G.Rao

Aug 5, 2013

Rather late, but my two bits worth is that u should not get discouraged and MUST carry on in your own way. Its the ants who will have the last word. A word of caution. Any ant must ensure it doesn't become a cockroach along the way. I hope and pray that Kejriwal doesn't become so, and for that matter Quantum too.

Like 

Lalitha

Jul 2, 2013

Go on, in my evaluation, Quantum funds stand out distinctly as a good performer capping the downsides well. That is all that is needed for long term investors. The weight of ants outweighs the weight of humans on our planet, go ant, go on!

Like 

Atiq

Jul 1, 2013

I would go with Option # 1.

Like 

mallikarjuna

Nov 9, 2012

Elephant is a mouse, built as per government's specifications.
Pride goes before a fall.

Like 

Jose

Nov 4, 2012

Keep going, the word is spreading, The Hindu Business line strongly recommends QLTE fund repeatedly. QLTE is rated 5 start by Value research, so your good work is being noticed. recently when I wanted to start a sip in QLTE fund through my online broker, I learned that they don't distribute this product and when queried about it, the reply I got was " their in house risk management team has not approved QLTE fund" . Any way I could buy it online from the fund house directly and start a sip as well. It was good I don't have pay the Rs 33 as commission every month. Hope QLTE maintains its good show.

Like 

Neeraj Varshney

Nov 3, 2012

Dear Quantumites,
It is a David vs Goliath fight. But end of day David did slay Goliath. I will go with Option I. You can fool all the people some of the time, some of the people all the time, but not all the people all the time. So, Quantum Family and the NAV is growing gradually like a value investment should. I can say that having got to know of Quantum by default ( I was researching for a stock, and then I found that when all mutual funds were selling that stock, Quantum was buying it. That's is where I stopped my research on the stock and got to research Quantum instead. Good I did it.) I have only one MF and two schemes in my portfolio--Quantum Long Term Equity Growth & QNifty. I switched all my schemes to Quantum.
So Mr Dayal, do not despair. You have loyal customers who are not interested in switching and redeeming at the drop of a hat.
Keep Up the Good Work.(I guess Social Proof should work from here on :-) )

Like (2)

N.M.R.Shreedhar

Nov 1, 2012

Option 1, of course.
Mr.Ajit Dayal, the very fact that your investor base has grown several times while others' are shrinking shows that the word is spreading-- after all, you cannot hide performance for long. as for QLTEF, keep going on the chosen path--you are doing a great job !! btw, I am one of the initial investors of QLTEF and am more than happy with the performance so far .

Like (2)

Sankar

Nov 1, 2012

Please keep going. We are with you all the way.

Like (2)

Ashok N

Nov 1, 2012

A small addition to Mr. Madhav Pandya's observation.

Mr. M. K. Gandhi rightly said "First they ignore you, then they laugh at you, then they fight you, then you win."

Look up for details on the central bankers' war on gold for an analogy.

Like (1)

Ashok N

Nov 1, 2012

Salman Khurshid does not indeed know about the Panchatantra story where a rogue elephant was brought down by a simple ant - enough said.

Keep up the good work, Mr. Dayal. Quantum LTEF's performance speaks for itself.

P.S: I liked the self-depreciating humor in the post.

Like (1)
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