Quantum ESG Best In Class Strategy Fund Direct Growth INF082J01382

Quantum ESG Best In Class Strategy Fund earns a Below Average Process Pillar rating.

The process benefits from its team of two portfolio managers, which is enough to execute the process. However, the rating is held back by the parent firm's five-year risk-adjusted success ratio of 41%. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's disappointing risk-adjusted performance, as shown by its average 10-year Morningstar Rating of 2.7 stars, also weakens the process. A lower star rating suggests that the firm has struggled to outperform on a risk-adjusted basis.

This strategy targets smaller plays than its peers’ average in the Equity - ESG Morningstar Category. But in terms of style (value/growth) exposure, it is similar. Analyzing additional factors, this strategy has consistently had a defensive tilt owing to its exposure to high-quality stocks over the past few years. High exposure to the quality factor means holding companies that are consistently profitable, growing, and have solid balance sheets. In recent months, the strategy was more exposed to the Quality factor compared with its Morningstar Category peers as well. This strategy has also displayed a tendency to hold more companies with high dividend or buyback yields than peers over recent years. Stocks with high yields can be more stable, mature companies, but at times extreme market pressure or fundamental deterioration may prompt them to cut their dividends, which tends to hurt stock performance. In the most recent month, however, the fund's Yield exposure was in line with the Morningstar Category average. Given the high trading volume of holdings, this fund also holds highly liquid assets. Such stocks may have less potential upside than illiquid holdings, but they are easier to trade during market downturns. In this month, the strategy also had more exposure to the Liquidity factor over 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 consumer cyclical and consumer defensive relative to the category average by 11.6 and 4.9 percentage points, respectively. The sectors with low exposure compared with category peers are financial services and industrials, underweight the average by 9.8 and 2.8 percentage points of assets, respectively. The portfolio is positioned across 59 holdings and its assets are more dispersed than peers in the category. In particular, 30.8% of the strategy's assets are concentrated in the top 10 fund holdings, as opposed to the category’s 39.6% average. And in closing, in terms of portfolio turnover, on a year-over-year basis, 23% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.