Debt Funds for investors

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Speaker Pankaj Pathak Fund Manager Fixed
Income April 26, 2021
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Interest Rates at Historic Lows
10-Year G-Sec Yield
3-Months Treasury Bill Yield
10.0
10.0
9.0
9.0
8.0
8.0
7.0
6.0
7.0
5.0
6.0
4.0
5.0
3.0
4.0
2.0
Source Bloomberg Quantum Research, Data as of
31st March 2021 Past performance may or may not
sustained in future
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Dilemma of Fixed Income Investors
What to do to Generate Higher Returns?
Should one move to Longer Duration Fund
categories?
Should one move to Credit Funds?
High Returns come with High Risk
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Liquidity
Why do we need Fixed Income in our Portfolio?
Income Diversification
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Long Duration Funds are for Longer Period
Crisil Composite Bond Index
16.0 1 year Return
14.0 3 Years Annualised Return 12.0 10.0
8.0 6.0 4.0 2.0 0.0
2011
2012
2013
2014
2015
2016
2017 2018 2019 2020 2021 Source Bloomberg,
Quantum Research, data as of 31st March 2021
Past performance may or may not sustained in
future
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Credit Risk???
Losses Are Generally Non- Recoverable

• credit defaults causes permanent damage to
  portfolio

Contagion Risk

• stress in a small pocket can cause system wide
  problem

Illiquidity

• difficult to sell to meet heavy redemptions or
  churn portfolio

Unfavorable Risk Returns Dynamics

• upside is limited but downside could be severe

• Low grade debt tends to struggle in slow economy
  weak equity markets

No Diversification
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The Pandemic Made it more Fragile
What do Headlines Say?
Source- Newspapers
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What is the Way Out???
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a Barbell Strategy
Presenting
combining Safety First Approach of Quantum
Liquid Fund with Active Duration Management of
Quantum Dynamic Bond Fund
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Quantum Liquid Fund Stands Out
ALWAYS Prioritize Safety over Returns Zero
Private Corporate Debt Invests only in Government
Bonds, Treasury Bill or AAA rated PSUs Low
Credit Risk Low Liquidity Risk A reasonable
portion of portfolio in cash or overnight asset
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Our Safety First Approach IN ACTION
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The ILFS Crisis (2018)

• ILFS carried AAA Credit Rating at the time of
  default
• Funding stopped for many Private Companies (even
  AAA rated) post ILFS
• Our investment process ensured that companies
  like ILFS could never become part of Quantum
  Liquid Fund
• Quantum Liquid Fund remained unscathed during the
  entire credit crisis triggered by the ILFS
  debacle

Our Safety First Approach works even in
unprecedented times. We remain committed to it!
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The Covid-19 Crisis

• Some of the Debt Funds were not able to meet
  redemptions as liquidity dried up
• Quantum Liquid Fund did NOT need the RBIs
  liquidity window to meet redemptions
• Even though no one could have predicted the
  pandemic, the safety first approach at Quantum
  Liquid Fund helped us sail through it

Our Safety First Approach works even in
unprecedented times. We remain committed to it!
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Active Duration Management
Quantum Dynamic Bond Fund
If interest rate expected to go down
If interest rate expected to rise
Focus on protecting value
Focus on capital appreciation
Invest in short term securities to make the
portfolio less sensitive to rising interest rate
Invest in long term securities to which gain more
when interest rate falls
In all market conditions fund maintains credit
risk at minimal levels by not investing in any
Private Credit
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In Conclusion
Safety First is the ONLY sensible approach to
take for your cash balances
Ride through the uncertain interest rate
environment by having longer tenor
Chasing the maximum possible return carries risk
you do not want to take on
Prudence is in lowering your returns expectation
closer to market reality
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Product Label
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Disclaimer Terms of Use
For AMFI/NISM Certified partners only. For
private circulation only. The data in this
presentation are meant for general reading
purpose only and are not meant to serve as a
professional guide/investment advice for the
readers. This presentation has been prepared on
the basis of publicly available information,
internally developed data and other sources
believed to be reliable. Whilst no action has
been suggested or offered based upon the
information provided herein, due care has been
taken to endeavor that the facts are accurate and
reasonable as on date. Quantum AMC shall make
modifications and alterations to the performance
and related data from time to time as may be
required as per SEBI Mutual Fund Regulations.
Readers are advised to seek independent
professional advice and arrive at an informed
investment decision before making any investment.
None of the Sponsors, the Investment Manager,
the Trustee, their respective Directors,
Employees, Affiliates or Representatives shall be
liable for any direct, indirect, special,
incidental, consequential, punitive or exemplary
damages, including lost profits arising in any
way from the data/information/opinions contained
in this presentation. The Quantum AMC shall make
modifications and alterations to the performance
and related data from time to time as may be
required. Please visit www.QuantumMF.com to
read scheme specific risk factors. Investors in
the Scheme are not being offered a guaranteed or
assured rate of return and there can be no
assurance that the schemes objective will be
achieved and the NAV of the scheme may go up and
down depending upon the factors and forces
affecting securities market. Investment in mutual
fund units involves investment risk such as
trading volumes, settlement risk, liquidity risk,
default risk including possible loss of capital.
Past performance of the sponsor / AMC / Mutual
Fund does not indicate the future performance of
the Scheme. Statutory Details Quantum Mutual
Fund (the Fund) has been constituted as a Trust
under the Indian Trusts Act, 1882. Sponsor
Quantum Advisors Private Limited. (liability of
Sponsor limited to Rs. 1,00,000/-). Trustee
Quantum Trustee Company Private Limited.
Investment Manager Quantum Asset Management
Company Private Limited. The Sponsor, Trustee
and Investment Manager are incorporated under the
Companies Act, 1956. 26th April 2021 Mutual fund
investments are subject to market risks, read all
scheme related documents carefully.
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