Quant Fund has become one of the highest-performing funds in the last year. Quant Small Cap Fund is among the number of funds that have achieved the top-ranking position in its category – among plenty of small-cap funds and all types of quant funds.

When an investor is looking to invest for seven years or longer, they can expect inflation-beating returns and dividends from fixed-income choices. This fund, as the name suggests, is a fund which invests in smaller companies. These funds are more dependent on the fall of stock prices compared to those that invest in larger companies. Thus, even though one can expect greater gains in the long run, there might be more volatility.

Key Facts

The small cap fund was launched on the 24 November, 1996. It is an open-ended small cap equity scheme owned by Quant Mutual Fund House.

Investment Goal, Strategy and Benchmark

The primary investment goal of the fund is to aim to get appreciation on capital & provide opportunities for growth in the long run by investing in a well-diversified set of companies with small capital. There is no guarantee that the investment goal will be accomplished.

This fund is benchmarked against National Stock Exchange Fifty (NIFTY) SmallCap 250 total return index.

The scheme will mainly invest in equity or equity-related financial instruments associated with small cap companies to accomplish the fund’s investment goals.

Category and Type

It is a small cap fund. The fund is an open-ended small cap equity scheme owned by Quant Mutual Fund House, predominantly dealing with small cap companies.

No lock-in period is required.

Asset Diversification and Portfolio Composition

• Around 98.8% of this fund is allocated in equities, with the rest in the cash and cash equivalents and none in debts. A minimum of 65% is required to be invested in equity or equity-related instruments of small cap companies with a maximum of 100%.
• The 10 top most equity holdings comprise almost 35% of the assets, and the 3 of the top most sectors comprise around 39% of the assets.
• This fund is diversified mainly among different types of investing. Investors tend to invest among various market capitalisations – around 15% in massive and large cap companies, almost 28% in mid cap companies and nearly 56% in small cap companies.

Minimum Cost of Application

• The minimum price of application for new investors is ₹5000 and above.
• The minimum price of application for existing investors is ₹1000 and above.
• The minimum price of application for the Systematic Investment Plan (SIP) is ₹1000 and multiples of ₹1 after that.

Load Structure

There is no amount for entry load.

For exit load, it is 1% if withdrawal or redemption is on or before a year (or three hundred and sixty-five days) from the date the allotment of the unit is completed.

Tax implications

• Returns are taxable at a rate of 15%. The tax is known as Short Term Capital Gain Tax (STGC), and it is applicable if the redemption of the units is done within a year of investment.
• If the redemption of the units is done after a year of investment, returns from those particular units in the same financial year are exempted from tax as long as the amount is less than or equal to ₹1 lakh.
• If the redemption of the units is done after a year of investment and the returns are more than ₹1 lakh, then returns that occurred from those particular units will be taxable at a rate of 10% (known as Long Term Capital Gain or LTCG). 
• According to the Dividend Distribution Tax, the dividend returns from this fund are added to the investor’s income and taxed accordingly. 
• If the dividend income is higher than ₹5000 in a financial year, the fund house may deduct a 10% TDS (Tax Deducted at Source) on the income.

Conclusion

As per the guidelines by SEBI, a quant small cap fund is a high–risk fund, yet it has performed well in the last three to five years and was the top-performing fund in its category. However, this fund’s volatility is exceptionally high compared to the other funds in the same category. Because of their unpredictable nature, stocks can do extremely well in favourable market conditions or fall in unsuitable market conditions. To make intelligent investment decisions, investors should identify their appetite for risk and study the market carefully. Kuvera Mutual Funds is a great platform to increase your knowledge about the stock market.

Frequently Asked Questions

1. What is the minimum application amount for investors looking to invest in the small cap fund?

The minimum application amount for new investors is ₹5000 and above. The same for existing investors is ₹1000 and above.

The minimum application amount for Systematic Investment Plans is ₹1000 and in multiples of ₹1 after that.

2. What is the load structure like for quant small cap funds?

There is no amount for entry load. For exit load, it is 1% if withdrawal or redemption is on or before 356 days from the date the allotment of the unit is completed.

3. What is the lock-in duration for quant small cap funds?

No lock-in period is required for investing in quant small cap funds.