Quant Focused fund Growth Option Direct Plan INF966L01853

Quant Focused fund earns an Above Average Process Pillar rating.

The primary contributor to the rating is its parent firm's superior long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 4.6 stars. The parent firm's five-year risk-adjusted success ratio of 100% also influences the rating. The measure indicates the percentage of a firm's funds that have outperformed their respective category's median return for the period. Their respectable success ratio suggests that the firm does well for investors and that this fund may benefit from that. However, the process is limited by the size of its portfolio management team, with eight portfolio managers.

This strategy, over time, has consistently held more undervalued companies, compared with peers in the Focused Fund Morningstar Category. But in terms of size exposure, it is similar to the average. Analyzing additional factors, this strategy has continually displayed high-yield exposure compared with Morningstar Category peers during recent years, holding more companies returning cash to shareholders via dividends or buybacks. High-yield stocks tend to be connected to more mature companies earning enough cash to return some to shareholders. At times, however, extreme market pressure can force them to cut their dividends, which hurts stock performance. In recent months, the strategy was more exposed to the Yield factor compared with its Morningstar Category peers as well. This strategy has also exhibited a tilt toward high-volatility stocks over these years, meaning it has invested in companies that have a higher historical standard deviation of returns. Such exposure tends to pay off when markets are hot and to be costly when they are not. Compared with category peers, the strategy also had more exposure to the Volatility factor in the most recent month. Given the low trading volume of holdings, this strategy has also tilted toward illiquid assets during these years. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. In recent months, the strategy also had less Liquidity factor exposure than its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section.

The portfolio is overweight in energy and utilities relative to the category average by 23.2 and 11.7 percentage points, respectively. The sectors with low exposure compared with category peers are consumer cyclical and healthcare, underweight the average by 17.0 and 7.6 percentage points of assets, respectively. The portfolio is positioned across 26 holdings and is relatively concentrated. In particular, 75.8% of the strategy's assets are housed within the top 10 holdings, compared with the typical peer's 33.6%.