Meta Description: Dive into the comparison of Quant Flexi Cap Fund and Parag Parikh Flexi Cap Fund to discover their differences in investment strategies, performance, and key attributes. Explore which fund aligns better with your financial goals.
Investing in mutual funds is a popular way to grow wealth over time. Among the plethora of mutual funds available, two that stand out are the Quant Flexi Cap Fund and the Parag Parikh Flexi Cap Fund. In this article, we will delve into a detailed comparison of these funds, analyzing their features, performance, and suitability for investors.
Introduction
Quant Flexi Cap Fund and Parag Parikh Flexi Cap Fund are both part of the flexible investment strategy genre, offering investors exposure to a diversified portfolio across different market capitalizations. Understanding the key aspects of these funds will help you decide which one aligns better with your investment goals.
The Parag Parikh Flexi Cap Fund and the Quant Flexi Cap Fund both belong to the Flexi Cap category of mutual funds, focusing primarily on equity investments. These funds offer investors the flexibility to invest across companies of different market capitalizations. Let’s explore the nuances of each fund through various aspects.
Fund Overview
The Quant Flexi Cap Fund is managed by a team of experienced professionals who leverage quantitative analysis and research to make investment decisions. This fund aims to capitalize on market opportunities by employing a quantitative model that identifies stocks based on factors like valuation, momentum, and quality.
On the other hand, the Parag Parikh Flexi Cap Fund follows a more eclectic approach, investing in a mix of Indian and foreign equities, debt instruments, and money market instruments. The fund’s objective is to generate long-term capital appreciation while minimizing the downside risk.
Performance Analysis
Comparing the historical performance of these funds can provide insights into their potential returns. Let’s take a closer look at their track records over the past few years.
| Fund | 1-Year Return | 3-Year Return | 5-Year Return |
|---|---|---|---|
| Quant Flexi Cap Fund | 18.97% | 34.05% | 22.22% |
| Parag Parikh Flexi Cap Fund | 19.31% | 22.38% | 18.02% |
Note: The returns mentioned above are for illustrative purposes only and do not guarantee future performance.
Analyzing returns is a vital aspect of any investment decision. Over a span of 3 months, the Parag Parikh Flexi Cap Fund delivered a return of 3.76%, while the Quant Flexi Cap Fund outperformed with a return of 9.08%.
Similarly, the Quant Fund exhibited better performance over the 6-month period, with returns of 19.13% compared to Parag Parikh’s 16.4%.
However, over the longer durations of 1 year, 3 years, and 5 years, the Parag Parikh Fund showed consistent returns of 19.31%, 22.38%, and 18.02%, respectively, compared to Quant Fund’s 18.97%, 34.05%, and 22.22%.
Investment Philosophy
The Quant Flexi Cap Fund employs a systematic approach that relies on quantitative models to identify investment opportunities. This approach aims to remove emotional biases from decision-making and provides a disciplined framework.
On the contrary, the Parag Parikh Flexi Cap Fund is managed with a value-oriented and research-driven philosophy. The fund manager aims to identify undervalued stocks and focuses on businesses with strong competitive advantages.
Examining the finer details of the funds, we observe that both have low expense ratios, indicating cost-effectiveness for investors. The exit loads for the funds are also reasonable, and there are no lock-in periods, providing investors with the flexibility to manage their investments. Both funds track the NIFTY 500 TRI index, allowing investors to gauge their performance against a well-diversified benchmark.
Diversification
Diversification is a key aspect of any investment strategy. Both funds diversify their portfolios, but in different ways.
The Quant Flexi Cap Fund diversifies by selecting stocks based on a quantitative model that considers various factors. This approach ensures exposure to a wide range of sectors and industries, reducing the risk associated with concentrated holdings.
The Parag Parikh Flexi Cap Fund, while investing in Indian equities, also allocates a portion of its portfolio to foreign equities, which can provide global diversification benefits. Additionally, the fund’s investments in debt and money market instruments further enhance diversification.
Risk Management
Quant Flexi Cap Fund employs quantitative models to manage risk and make investment decisions based on data-driven analysis. This approach aims to mitigate downside risk by identifying potential weaknesses in the selected stocks.
On the other hand, the Parag Parikh Flexi Cap Fund follows a more cautious approach by investing in a mix of asset classes. The inclusion of debt instruments and money market instruments can help stabilize the fund during periods of market volatility.
Risk Measures
Understanding risk is equally important, if not more, than focusing solely on returns. The Parag Parikh Flexi Cap Fund demonstrated lower risk measures across the board. It had a lower standard deviation (11.88 vs. 17.53), indicating less volatility. The Sharpe Ratio, which measures risk-adjusted returns, favored the Parag Parikh Fund (1.69 vs. 1.73).
Moreover, the Parag Parikh Fund’s lower beta (0.65 vs. 0.94) suggests that it is relatively less volatile compared to the market. The Sortino Ratio, an indicator of downside risk, also favored the Parag Parikh Fund (2.38 vs. 3.12). These measures collectively suggest that the Parag Parikh Fund offers better risk-adjusted returns.
Portfolio Composition
Differences in portfolio composition can reveal the underlying strategies of the funds. The Parag Parikh Fund’s top three sectors include Financials (30.97%), Services (15.76%), and Technology (12.31%). In contrast, the Quant Fund’s top sectors are Financials (21.69%), Energy (12.87%), and Construction (5.74%).
The Parag Parikh Fund’s top holdings comprise ITC Ltd., Bajaj Holdings & Investment Ltd., and ICICI Bank Ltd., whereas the Quant Fund’s top holdings include Reliance Industries Ltd., Reserve Bank of India, and HDFC Bank Ltd.
Key Ratios
Examining key ratios further aids in evaluating the funds’ financial health. The Parag Parikh Fund boasts a lower P/E Ratio (18.42 vs. 20.61), indicating that investors are paying less for each unit of earnings.
Additionally, the Parag Parikh Fund’s P/B Ratio (3.53 vs. 2.19) suggests a higher valuation relative to its net asset value. In terms of asset allocation, the Parag Parikh Fund has a higher equity percentage (85.18% vs. 33.23%) and a slightly higher debt percentage (13.2% vs. 8.19%).
Investor Profile
Both funds have relatively low expense ratios, with the Parag Parikh Fund at 0.68% and the Quant Fund at 0.58%. They share similarities such as no lock-in period, and both are suitable for medium-term investments. The funds are benchmarked against the NIFTY 500 TRI index, providing a clear performance reference.
Choosing the right fund also depends on your investor profile and risk tolerance. The Quant Flexi Cap Fund might suit investors who prefer a systematic and data-driven approach, while the Parag Parikh Flexi Cap Fund might appeal to those looking for exposure to both domestic and international markets.
Key Attributes
- Portfolio Composition:
- Quant Flexi Cap Fund primarily focuses on quantitative models to select stocks from various sectors and market caps.
- Parag Parikh Flexi Cap Fund maintains a balanced approach with exposure to equities, debt, and international securities.
- Risk and Return Profile:
- Quant Flexi Cap Fund’s data-driven approach aims to optimize returns, but its performance can be influenced by the accuracy of its models.
- Parag Parikh Flexi Cap Fund’s diversified portfolio might provide more stability during market fluctuations.
- Expense Ratio:
- The expense ratio of Quant Flexi Cap Fund and Parag Parikh Flexi Cap Fund can impact the overall returns to investors. It’s important to assess the expense ratio in relation to the fund’s performance.
- Investment Horizon:
- Quant Flexi Cap Fund’s quantitative approach might suit investors with a shorter investment horizon seeking potential gains.
- Parag Parikh Flexi Cap Fund’s mixed portfolio could be attractive to those with a longer investment horizon and a desire for diversification.
Choosing between Quant Flexi Cap Fund and Parag Parikh Flexi Cap Fund depends on various factors, including your risk tolerance, investment goals, and time horizon. If you lean towards a data-driven, quantitative approach, Quant Flexi Cap Fund might align better with your preferences. On the other hand, if you seek a balanced portfolio with exposure to different asset classes, Parag Parikh Flexi Cap Fund could be the right fit.
Quant Flexi Cap Fund vs Parag Parikh Flexi Cap Fund
| Category, Sub-Category | Parag Parikh Flexi Cap Fund | Quant Flexi Cap Fund |
|---|---|---|
| Fund Age | 10 yrs 3 m | 10 yrs 7 m |
| Fund Size | ₹39,848 Crs | ₹1,782 Crs |
| RETURN | ||
| 3 months | 3.76% | 9.08% |
| 6 months | 16.4% | 19.13% |
| 1 year | 19.31% | 18.97% |
| 3 year | 22.38% | 34.05% |
| 5 year | 18.02% | 22.22% |
| RISK MEASURES | ||
| Standard Deviation | 11.88 | 17.53 |
| Sharpe Ratio | 1.69 | 1.73 |
| Beta | 0.65 | 0.94 |
| Sortino Ratio | 2.38 | 3.12 |
| Alpha | 7.49 | 12.23 |
| PORTFOLIO | ||
| Top 3 sectors | Financial (30.97%) | Financial (21.69%) |
| Services (15.76%) | Energy (12.87%) | |
| Technology (12.31%) | Construction (5.74%) | |
| Top 5 holdings | ITC Ltd. (7.09%) | Reliance Industries (8.72%) |
| Bajaj Holdings (6.94%) | RBI (8.19%) | |
| ICICI Bank (5.55%) | HDFC Bank (7.39%) | |
| Power Grid Corp (5.4%) | DLF Ltd. (4.28%) | |
| Alphabet Inc Class A (5.12%) | SBI (4.18%) | |
| P/E Ratio | 18.42 | 20.61 |
| P/B Ratio | 3.53 | 2.19 |
| Equity % | 85.18% | 33.23% |
| Debt % | 13.2% | 8.19% |
| FUND DETAILS | ||
| Expense Ratio | 0.68% | 0.58% |
| Exit Load | 2% | 1% |
| Lock-in | No Lockin | No Lockin |
| Benchmark Index | NIFTY 500 TRI | NIFTY 500 TRI |
| Min. Investment | SIP ₹1000 & Lumpsum ₹1000 | SIP ₹1000 & Lumpsum ₹5000 |
| Investment Horizon | Good for medium term | Good for medium term |
Note:- The information presented in the tabular format above is sourced from “ET Money,” a financial platform that offers investment-related information and insights. The credit for this article’s tabular content and information goes to “ET Money.”
Conclusion: In the realm of mutual funds, the choice between Quant Flexi Cap Fund and Parag Parikh Flexi Cap Fund boils down to your investment philosophy and risk appetite. The Quant Fund brings quantitative rigor to the table, while the Parag Parikh Fund offers a blend of domestic and international investments. Analyzing their performance, investment philosophy, and risk management strategies will help you make an informed decision aligned with your financial goals.
In a nutshell, the Parag Parikh Flexi Cap Fund and the Quant Flexi Cap Fund each have their strengths and advantages. While the Quant Fund showcased superior short-term performance, the Parag Parikh Fund demonstrated more consistent long-term returns and better risk-adjusted measures.
Your investment choice should align with your risk tolerance, investment horizon, and financial goals. Before making a decision, it’s recommended to conduct thorough research, consult with financial advisors, and assess your own investment needs to determine which fund is the right fit for your portfolio.
Disclaimer: The information provided in this article is for educational purposes only and should not be construed as investment advice. Always conduct thorough research and consider seeking advice from a qualified financial professional before making any investment decisions.
