Quant Flexi Cap Fund: How the Fund Beat its Benchmark by 30% and Then Lost Money

What You Are Actually Buying

A flexi-cap fund is required to keep at least 65% of its money in equities, but beyond that it has a free hand to invest across large, mid, and small-cap companies in whatever mix it chooses.

That mandate is the appeal: in theory, the manager can hide in large caps when the market looks frothy and reach into smaller, faster-growing names when the cycle turns.

Quant runs this mandate with unusual intensity. The house's stated philosophy revolves around what it calls a dynamic, multi-factor framework.

It actively rotates between sectors and market caps based on momentum, liquidity, valuation, and risk-appetite signals, rather than buying and holding a fixed basket.

In practice this means the portfolio can look dramatically different from one quarter to the next.

The fund house's lead is Sandeep Tandon, supported by a wider investment team, and the scheme is benchmarked against the NIFTY 500 TRI.

Fund Snapshot

The Track Record

Here is where the fund's character shows up most clearly.

The table below tracks the scheme's financial-year returns against its benchmark, the CNX Nifty, alongside how it ranked within its category each year.

These are Regular Plan figures, the Direct Plan carries a lower expense ratio and therefore a slightly higher NAV.

In FY22, the fund was ranked 1st in its category and then, it fell to its very worst just three years later.

This is the signature of a strategy that takes big, concentrated bets. When those bets line up with the market's mood, the fund flies. When the regime shifts and the bets are wrong-footed, there is nowhere to hide.

The FY24 surge of 57.6%, almost double the benchmark that year, is the kind of number that pulls in new money.

But notice what came immediately after: two consecutive negative financial years. An investor who saw the 57% print, assumed it was the new normal, and invested at the top would have sat through the painful part of the cycle.

Point-to-Point Returns: A Snapshot in Time

Trailing returns flatter or punish a fund depending entirely on when you measure them.

As of late June 2026, after a sharp recovery in the first half of the year, the scheme's annualised performance looks like this:

Two things jump out. First, over three and five years the fund has comfortably beaten its benchmark, roughly five and four percentage points of annualised outperformance respectively.

Second, look at how violently the rankings swing with the lookback window: rank 1 over three months, but rank 19 of 45 since inception.

Why the Headline Numbers Hide the Turbulence

Annual numbers smooth over a lot but a quarter-by-quarter record shows just how bumpy the journey actually is.

A double-digit gain in one quarter and a double-digit loss in another, within the same twelve months, is not unusual for this fund.

Under the Hood: Where the Money Sits

The fund's portfolio explains a lot of the volatility. As per its latest disclosed holdings, the fund ran a fairly concentrated book of roughly 26 stocks across 18 sectors, with a heavy tilt toward a single theme.

Power and the broader Adani group cluster dominated the top of the portfolio. Adani Power alone was close to a 10% weight, with Adani Enterprises, Adani Green and Adani Energy Solutions adding several percentage points more.

Concentration like this is a double-edged sword. It is precisely how the fund generates outsized returns when its chosen names run and precisely why it can fall hard when sentiment turns against those same names.

Here are its top holdings as last disclosed:

On the sector side, the tilt is unmistakable: Power is by far the largest allocation at nearly 22% of the book, followed by Automobile & Ancillaries and Trading.

One number worth keeping in mind: the portfolio's price-to-earnings ratio sat around 44 and price-to-book near 8.4. Those are rich multiples, which tells you the fund is willing to pay up for momentum and growth rather than fishing in the value bin.

Reading the Risk Numbers Honestly

The fund's own volatility measures confirm what the returns already suggest. A beta of around 1.04 means it moves roughly in line with and slightly more than the broader market on average.

But the headline figure that matters most for a fund like this is drawdown: how much it can fall from peak to trough.

During the March 2020 COVID crash, the fund's worst one-month stretch saw it fall around 34% - broadly in line with the market's collapse at the time.

A fund that can drop a third of its value in a month is not a fund you hold with money you might need next year.

On the flip side, its best one-year window delivered a return well above 140%, captured coming out of that same crash. That is the bargain this fund offers: extraordinary upside capture in exchange for full participation in the downside.

Who this Fund Actually Suits

Stripping away the noise, the data points to a fairly specific kind of investor. The Quant flexi cap fund makes sense if:

• You have a genuinely long horizon, seven years or more, so a bad financial year or two does not force you to sell at the wrong time.
• You are using it as a satellite holding, sized as a slice of an equity portfolio rather than its foundation, ideally alongside steadier core funds.
• You invest through SIPs rather than lump sums, so the fund's volatility works in your favour by buying more units when it dips.
• You can emotionally tolerate watching the fund near the bottom of its category for a stretch without abandoning it.

It makes far less sense if you are likely to invest right after a hot run, if you need the money within three to four years, or if seeing a deeply negative year would push you to redeem in a panic.

For those investors, a more conventional, lower-beta flexi-cap fund will deliver a smoother and quite possibly better realised experience, because the realised return is the one you actually stay invested to collect.

It is worth underlining the SIP point with the fund's own data. A Rs 5,000 monthly SIP run over ten years grew to roughly Rs 17.2 lakh against a benchmark value near Rs 12.3 lakh on the same Rs 6 lakh invested.

This is a meaningful gap built through disciplined, automatic investing across the fund's good years and bad.

The staggered approach is arguably the only sensible way to own a fund this volatile.

Happy investing.

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