Quantum Mutual Fund files for multi-asset allocation scheme

Experts see the fund house’s move in the light of changed taxation rules.

Quantum Mutual Fund has filed for Quantum Multi Asset Allocation Fund (QMAF). The fund house has filed the scheme information document (SID) with the capital market regulator – Securities and Exchange Board of India. The fund house is known for its focus on value investing and has a few schemes. Launched in September 2005, the fund house manages assets (AUM) worth Rs 2,293 crore as on July 31, 2023, spread across 11 schemes, as per ACE MF.

As per QMAF, the fund manager will invest 35 to 65 percent of the money in stocks, 25 to 55 percent of the money in bonds and 10 to 20 percent of the money in gold and related instruments. The fund manager will ascertain the allocation to each of the asset classes mentioned above after taking into account various factors including price/earnings ratio relative to historical averages; the relationship between earnings yield to bond yield relative to historical averages and macroeconomic factors prevailing globally, and within India.

SID further makes it clear that the equity component will be predominantly invested in securities of the Nifty 50 index and the debt component will include high-quality bonds, wherein the fund managers will manage the duration actively, depending on their view on interest rates.

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The fund house already has a scheme - Quantum Multi Asset Allocation Fund of Funds which has AUM of Rs 53 crore and invests in various schemes of Quantum mutual fund that feed into gold, bond and equity funds. The scheme has given 8.79 percent in three years ended August 22, 2023 compared to 15.07 percent returns given by multi-asset allocation funds as a category, as per Value Research.

Experts see the fund house’s move in the light of changed taxation rules. The extant multi-asset allocation FoF scheme would be considered as a debt fund for the purpose of taxation, and capital gains on units bought after April 1, 2023 will be taxed at slab rate. This must have nudged the fund house to launch a scheme that would invest across asset classes and also be eligible for indexation benefit on capital gains for the investors. The QMAF SID makes it clear that the allocation to equities and related instruments will be kept at minimum 35 percent, which makes it more tax efficient, compared to a bond fund.

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The fund house had earlier launched a new fund offer of Quantum Nifty 50 ETF FoF in July 2022. The largest scheme of the Quantum Mutual Fund – Quantum Long Term Equity Value Fund has assets under management worth Rs 930 crore.