Best Quantum Equity Mutual Funds

A sub-division of Quantum Advisors, Quantum Mutual funds came into existence and achieved SEBI registration in 2005. The Quantum Asset Management Company is responsible for managing all of its MF schemes. It is the country’s first direct-to investor mutual fund company. It boasts a quarterly average AUM of Rs.1785.69 crore as of March 2021. 

As of now, investors can choose from approximately 10 schemes under the asset management company. One of the categories includes the best Quantum equity mutual funds.

Equity funds predominantly invest in shares of various companies. Depending on the market capitalisation of the companies involved, equity MFs have 5 types: large-cap, mid-cap, micro-cap, multi-cap, and small-cap funds. Market capitalisation is the total value of all shares of a company. Large-cap funds allocate at least 80% of total investment in stocks of the top 100 companies. Mid-cap companies invest approximately 65% of total assets in mid-cap company shares. Finally, small-cap companies invest the same percentage in small-cap company shares.

The primary advantage of investing in top Quantum equity mutual funds over individual stocks is they allow investors to gain substantial exposure to different equity shares. With these funds, individuals can achieve remarkable portfolio diversification without investing a fortune. 

The best Quantum equity mutual funds 2023 also have a number of types depending on their investment style. These are active and passive funds. The former involves fund managers choosing company shares to distribute investment. Passive funds, on the other hand, track a popular market benchmark and replicate their performance. The latter does not involve the active participation of a fund manager.

Taxability

Short-term Capital Gains (STCG) Tax: This tax is applicable on returns when individuals redeem investment units within 1 year of purchase. These returns are taxable at a flat rate of 15%, irrespective of the total amount.

Long-term Capital Gains (LTCG) Tax: When investors decide to sell units after 1 year from their date of purchase, their returns are considered long-term capital gains. The portion of these returns exceeding Rs.1 lakh attracts an LTCG tax of 10% without indexation benefits. 

TDS: Equity MFs may also offer dividend pay-outs. Investors need to pay a 10% TDS on any such income exceeding Rs.5,000.

Factors to Consider Before Investing

Quantum presently offers nearly 5 schemes in this category. Individuals need to keep a few things in mind when choosing from the best Quantum equity mutual funds. Here are a few of them.

Investment goal: Individuals need to figure out their financial objectives well before proceeding with an investment. At the same time, one may want to keep an eye on a suitable time horizon. These factors should decide if a fund scheme will help meet your investment goals within the preferred time frame. 

Risk factor: Equity MFs are known to come with a higher risk than other fund types. However, the best Quantum equity mutual funds can bring down the risk of investing in stocks directly. This is because these funds invest in companies across different sectors or market capitalisations. With a proper investment strategy, certain sectors will compensate for the losses from other sectors during a market slump. Regardless, individuals must examine their risk appetite before picking a fund scheme best suiting their tolerance.

Returns: As already mentioned, equity MFs have prospects for the highest returns compared to other funds. This income margin depends on market capitalisation. For instance, small-cap funds have a higher scope of growth than large-cap ones. As a result, individuals can expect high returns from the former. However, this also means the volatility is high for small-cap funds, leading to significant losses. Choosing among them solely depends on the investor’s final goal.

Experience of the fund manager: The performance of an equity mutual fund significantly depends on the decisions of a portfolio manager. This person is responsible for analysing market trends and deciding investment strategies for maximum returns. Accordingly, they will handpick stocks to allocate funds and also choose the proportions. As a result, the best Quantum equity mutual fund will comprise the right mix of investment units in adequate proportions to help investors meet their financial goals. Considering the role that a fund manager plays in all this, investors must check their competence and track record beforehand.

Past performance of the fund: A fund’s track record can help potential investors understand its investment style and behaviour under different economic circumstances. Although a fund’s historical performance cannot indicate its future returns accurately, it can help establish a trend. 

Expense ratio: Asset Management Companies charge a specific fee for efficient portfolio management. This is the expense ratio, and it varies across fund schemes. Such costs reduce your net income. When choosing from the best Quantum equity mutual funds, consider comparing their expense ratios to ensure maximum returns.

Another financial liability that can add to the investment cost is tax. Depending on the type of returns and investment horizon, investors need to pay the following taxes against equity MFs.

Investing in equity mutual funds can be a tricky job. However, a thorough knowledge of the costs involved and all other factors discussed above can help you get your most suitable pick from the best Quantum equity mutual funds.