Quant ESG Integration Strategy Fund Direct Reinvestment of Income Distribution cum cptl wthdrwl opt INF966L01AG7

Quant ESG Integration Strategy Fund earns an Above Average Process Pillar rating.

The leading factor in the rating is its parent firm's excellent long-term risk-adjusted performance, as shown by the firm's average 10-year Morningstar Rating of 4.5 stars. The parent firm's five-year risk-adjusted success ratio of 94% also bolsters the process. The measure indicates the percentage of a firm's funds that have beat their respective category's median return for the period. Their impressive 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 parent firm's five-year retention rate of 75%, which raises concerns about long-term strategic consistency..

This strategy skews toward smaller, more undervalued companies compared with its average peer in the Equity - ESG Morningstar Category. Examining additional factor exposure, the managers have continually shown a willingness to take risks over the last few years, demonstrated by the portfolio's high volatility exposure. Such exposure tends to pay off when markets are hot and to be costly when they are not. In recent months, the strategy was more exposed to the Volatility factor compared with its Morningstar Category peers as well. The managers have also tended to overweight yield during recent years, shown by the portfolio's high exposure to dividends or buybacks. 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. Compared with category peers, the strategy also had more exposure to the Yield factor in the most recent month. Additionally, the strategy had less exposure to high-momentum stocks compared with Morningstar Category peers in recent months. Momentum investors tend to expect stocks that have done well recently to continue to do so in the short term. Momentum approaches can entail higher turnover and trading costs since the top stocks can often change. 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 utilities and real estate relative to the category average by 15.2 and 9.7 percentage points, respectively. The sectors with low exposure compared with category peers are industrials and basic materials, underweight the average by 9.4 and 7.4 percentage points of assets, respectively. The portfolio is composed of 24 holdings and is relatively top-heavy. Of the strategy's assets, 69.0% are concentrated within the top 10 holdings, as opposed to the typical peer's 38.1%. And in closing, in terms of portfolio turnover, this portfolio trades more frequently than the average peer in its category, which may result in higher trading costs for investors and cause a drag on performance.