Quant Vs PPFAS: Flexi Cap Funds With Diverse Strategies And Stellar Returns
Taking two very different means to reach the same goal may not always deliver the same results. Contrarian calls and diverse strategies to reach the same goal of returns usually favour one out of the two.
This scenario is unique because we have a win-win situation with the Parag Parikh Flexi Cap Fund and Quant Flexi Cap Fund. They are very different funds in the same category with unique stands on strategy, cash calls, and investing philosophies. Despite their different approaches, both have managed to deliver stellar returns.
"Any return over 20% is a huge bonus. With the contrarian investment strategy they have, it is a boon for investors as they have both done incredibly well. PPFAS have always called for a longer investing horizon while Quant has changed conventions and topped charts. Both have unique value play," said Santosh Joseph, founder of Germinate Investment Services.
Despite the contrast in their investing strategy, both funds have delivered more than 24% returns over a five-year period. Both the funds also have significantly outperformed the category average of 25%, when it comes to rolling returns.
"Investors chase returns, and the good performance in flexi cap is a product of the broader markets that have rallied. PPFAS has been consistent with their value style approach. Quant has a blended strategy of growth, momentum and value. PPFAS has a low churn, while Quant has taken super tactical and timed calls," said Rushabh Desai, founder of Rupee With Rushabh.
Deeper Differences
These funds with different investing styles have managed to deliver very similar and even comparable returns. With Quant taking the lead in returns with a more aggressive approach, PPFAS has had a 'buy and hold' stand.
The difference is beyond the hood level. PPFAS does not hesitate from a cash or contrarian call. Quant chases the momentum and squeezes the opportunity. There is a huge style divergence, said Joseph. Quant plays on domestic Indian equities, while PPFAS taps into the international opportunities available.
"Quant Flexi cap has not taken much cash calls, but their other schemes have taken some aggressive cash calls," said Desai. The flexi cap is tilted toward the large caps for safety and the positioning of the stocks may be poised to capture momentum, he said.
PPFAS has a more value-oriented strategy and because of this it is bound to take more cash calls. Flexi cap funds tend to deliver the most in the mid and short term, while PPFAS' stand might give investors promising returns in the long term. This can be attributed to their buy-well-and-hold-tight strategy, while other funds like Quant take a more blended approach that may work better for a relatively shorter term.
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