How DIY Investors Should Select Funds
                     How DIY Investors Should Select Funds
Simplicity. Transparency. Integrity. 
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What Is Your Saving Mantra?
Is it
Income – Expenses = Savings
Or
Income – Savings = Expenses
Small & Regular Saving = Fortune In Making
How much it You will have 
What you save For How much did could earn (Compounded 
every month you save
every year Annually)
10% Rs.7,23,987
Rs.1,000 20 years Rs.2,40,000 12% Rs.9,19,857
15% Rs.13,27,073
The numbers used in the table are for illustrative purpose only and does not guarantee any return.
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Savers Still Heavily Reliant on Cash
Cash & Bank Deposits Others Life Insurance Share & Debentures
2017-18 49% 22% 17% 3%
2015-16 54% 25% 18% 3%
2010-11 63% 17% 19% 1%
2005-06 54% 26% 14% 6%
2000-01 45% 37% 14% 5%
1990-91 42% 40% 10% 8%
1980-81 59% 30% 8% 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Source : Central Statistics Office (CSO)
Cost of Living and Your Investments
Consumer Basket 1990* 2000 2010 2015 2020E CAGR
TOTAL SPENDING PER ANNUM 23,759 68,923 151,279 280,064 427,619 10.1%
Price of gold, INR/10 grams 3,409 4,528 18,268 26,335 52,000 9.5%
Units ( Grams) of gold to consume my basket 70 152 83 106 82
BSE SENSEX 730 4,659 15,585 26,557 37,935 14.1%
Units  of BSE-30 Index to consume my basket 33 15 10 11 11
Fixed Deposit Basket Index Value (Value of initial 
investment Jan 1, 1990 =1000) (SBI 1 Year Deposit 
Rate)* 1,064 2,220 3,550 4,628 5,836 5.8%
Units  of FD Basket to consume my basket 22 31 43 61 73
• Quarterly compounding and Tax rate on Fixed Deposit assumed to be 30%
• 2020E : As on August 2020 Source: RBI, Bloomberg
Past Performance may or may not be sustained in future. 
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What is Asset Allocation?
Asset allocation involves dividing an Summer Monsoon
investment portfolio among different asset 
categories like equities, bonds, property, 
commodities and cash
Street vendor
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Asset Allocation
• Helps you override emotions
• Helps you overcome biases
• Helps to tide over market 
cycles
Past performance May or May not sustained in future
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Significance of Asset Allocation
It is generally seen that more than 90% of the variations in a portfolio’s return can be attributed to the asset 
allocation decision.
Investment returns of a portfolio
10%
90%
Asset allocation decisions Market timing, stock selection etc.
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Rule 1: Embrace Market Cycles
Asset classes go through cycles-Bear (Pessimism) and Bull (Optimism)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020*
Sensex Sensex Gold Sensex Gold Gold Sensex Sensex Sensex Bonds Bonds Sensex Gold Gold Gold
49% 49% 26% 83% 23% 32% 28% 11% 32% 9% 13% 30% 8% 16% 29%
Gold Gold Bonds Gold Sensex Bonds Gold Bonds Bonds Sensex Gold Gold Sensex Sensex Bonds
20% 16% 9% 24% 19% 7% 12% 4% 14% -4% 11% 5% 7% 14% 9%
Bonds  Bonds Sensex Bonds Bonds Sensex Bonds Gold Gold Gold Sensex Bonds Bonds Bonds Sensex 
4% 7% -52% 4% 5% -24% 9% -5% -8% -7% 3% 5% 6% 11% -7%
Past performance may or may not sustained in future
* YTD - Jan to September 2020
The chart ranks the best to worst performing indexes per calendar year from top to bottom
Past performance may or may not be sustained in future.
Imagine someone holding an all equity  Indices Used: S&P BSE Sensex; MCX Gold Commodity Index and
portfolio in 2008, or holding none in the CRISIL Composite Bond Fund Index
equity rally that followed? Source: Bloomberg
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Cycle of an Investor’s Emotions
• Can you control what is happening in the market? 
•  Can you control how you react to what is happening in the market?
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Know your Behavioral Biases
These can prevent you from choosing/sticking with the optimal asset allocation
• Herd mentality: This mentality is often the result of a 
reaction to peer pressure which makes investors act in order to 
avoid ‘feeling left out’ or ‘left behind’ from the group. In the 
quest to earn quick gains from his investments, investors often 
chase returns by following the herd. In the process of 
following the herd, investors usually end up with the portfolio 
that is more risky and may not be appropriate as per his/her 
risk appetite. The outcome has always been a disappointment 
in terms of returns.
People perceive things can only get better
So they BUY
• Recency bias: Investors get swayed by recent events and tend 
to be either overweight or underweight the asset class in 
favor/out of favor; thus leading to inappropriate asset 
allocation. The overall risk in the portfolio also increases 
drastically as investors often swing their portfolios to extremes 
during such situations with the hope that the trend will 
continue in future. People perceive things can only get worse
So they SELL
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Rule 2: Diversify
• Mitigates risk inherent of a particular 
asset class
• Reduces dependency on a single asset FIXED INCOME
Regular income 
class to generate returns and stability
• No need to time markets EQUITY
• Diversification compensates for one 
Long term growth
assets down cycle with another assets up 
cycle
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Investors Tend to Ignore Risk when Chasing Returns
Comparison of Quantum’s scheme based on high risk –high return , low risk -low return principle
Disclaimer: The above chart is for illustration purpose only
The various BSE and NSE Indices are compiled on factors such as market cap, trading volume, and a broad sector representation. In doing so, the quality of the management - 
while admittedly a qualitative judgement - is not considered. This, in our view, represents "risk". For the increased "risk" taken, financial theory suggests that investors should 
get higher returns. By adding an integrity screen to our investment process, the Quantum Long Term Equity Value Fund (QLTEVF) and the Quantum Tax Saving Fund 
(QTSF) are attempting to reduce such "risks" - and therefore might generate lower returns. To peruse the performance of our schemes please see below. Past Performance may 
or may not be sustained in the future.
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Diversification in Assets Depends On:
1) Time horizon 
• Longer time horizon  riskier, or more volatile, investments  
• Short term horizon  stable, low risk instruments
2) Risk tolerance
• High-risk tolerance  can risk losing money in order to get better results
• Low-risk tolerance  investments that will preserve the original investment 
Importance Of Right Asset Allocation
Mr. A Mr. B
Age 35 years
Time to Retire 20 Years
Retirement Corpus Required Rs. 2.20 Cr
Corpus Corpus 
Investment Allocation Mr. A Mr. B
(Rs) (Rs)
Equities 30% 95.54 L 60% 1.91 Cr
Debt & Cash 60% 82.46 L 30% 41.23 L
Gold 10% 10.93 L 10% 10.93 L
Total 100% 1.88 Cr 100% 2.43 Cr
Likely to achieve the 
goal  
The above illustration is calculated for monthly SIP of Rs.24,000/-. Annual Return Assumed  Equity – 15%, 
Debt – 8% and Gold – 6%. The above corpus are pre-tax.
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Which Fund Would You Buy Based On These Facts?
Gain in Year 1 Loss in Year Two
100%
80%
60%
40%
20%
0%
-20% Fund 1 Fund 2
-40%
-60%
-80%
-100%
This is for  illustration purpose only. Performance figures are not actual.
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“Illusions” May Make You Buy The Wrong Fund
Fund 1 Fund 2
Gain in Year 1 +90% +46%
Loss in Year 2 -75% -47%
An initial investment of 
Rs.10,000 would be worth Rs.4,750 Rs.7,738
How much would Fund One 
have to increase to catch up Assuming that Fund 
with Fund Two? +63% Two has no returns 
(Not Likely!)
This is for illustration purpose only. Performance figures are not actual.
Look at the long term performance of the fund before investing
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Portfolio Impact of Diversification
If you compound your money at 12% per year you are better off than an investor who makes 25% in one year and 
loses 20% in the next 
Risk-Return Equity +Debt  +Gold * Equity + Debt ** Equity Debt Gold
CAGR 10.36% 10.66% 11.59% 7.31% 12.36%
Annualized SD 9.55% 14.78% 22.41% 3.29% 17.29%
VAR -15.75% -24.39% -36.98% -5.43% -28.53%
Maximum Drawdown -21.43% -38.74% -56.17% -6.27% -25.22%
                                                          
Sharpe Ratio 0.4692                           0.3236                 0.2550        0.4352        0.3750 
Time frame is November 2004 to June 2020. The period is taken from 2004 since the asset allocation 
weights are calculated based on normalizing the historical monthly equity and debt indicators. Given the 
normalization time frame used in the strategy, data availability for certain parameters beyond the time 
The most diversified strategy yields similar frame analyzed was a constraint.  Compiled by Quantum AMC
returns with the lower volatility, compared to a *Equity-Debt-Gold in ratio of 40-40-20. **Equity-Debt dynamically allocated in  80-20 range
Based on Sensex TRI, Crisil Composite Bond fund index, and Domestic Gold Prices
pure equity strategy Note: Past performance may or may not be sustained in the future
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How Diversification could have Benefited the Investors in the 
Covid-19 Sell Off in March
Performance Jan 1 - Mar 31 2020
100% equity 40% Equity 40% Debt 20% Gold
0%
-5%
-10% -8%
-15%
-20%
-25%
-30% -28%
-35%
-40%
Based on Sensex TRI , Crisil Composite Bond Fund Index and Domestic Price of Gold as on 31st March 2020
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Rule 3: Rebalance Regularly
• Allows investors to “buy-low sell-high”
• Taking money from an asset class doing well and putting it an asset class 
doing bad 
SELL on a high when others are greedy
BUY on a low when others are fearful
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Rule 4: Keep Costs Low
Expense Ratio 1.25% 2.25%
Rate of Return p.a.# 15% 15%
Years Fund 1 Fund 2 Difference %
5 423,460 413,121 10,338 2.50%
10 1,229,894 1,165,888 64,006 5.49%
15 2,765,663 2,537,537 228,126 8.99%
20 5,690,374 5,036,881 653,494 12.97%
25 11,260,180 9,591,044 1,669,136 17.40%
The above calculation is for monthly Investment of Rs.5,000/- in Fund 1 and Fund 2 up to 25 years at the 
beginning of every month.
This is for illustration purpose only. Performance figures are not actual.
# Rate of Return before expenses.
A difference of 1% in expense ratio makes a huge difference over the years
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Lower Costs Will Always Work For You!
This is for illustration purpose only. Performance figures are not actual.
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Rule 5: Be Disciplined
Time in the market is more important than timing the market In 2008 see the net worth 
plummet. Buffet's portfolio 
declined from $62 billion to 
$37 billion. That is a 40% 
plummet during the subprime 
crisis! The message here is - 
when the stock market corrects, 
even the best investors' 
portfolios follow suit. It is the 
long tenure that capitalizes on 
the magic of compounding to 
pay good returns. Do good 
returns matter? Of course they 
do. But to create wealth, it is 
compounding that matters 
more
Please note that the above information is for explanation purposes only. The information provided here is not meant to be considered as investment advice/ recommendation to 
invest or for asset allocation. Please seek independent professional advice and arrive at an informed investment decision before making any investments.
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Equities Work their Magic Over the Long Term
Holding Period 1 year 3 year 5 year 7 year 10 year
Number of Rolling cycles 258 237 213 189 153
Number of Cycles when returns are negative 75 23 11 0 0
Negative returns period as % of total Cycles 29% 10% 5% 0% 0%
Number of Cycles when returns are below Saving 
A/c (4%) 85 44 32 1 0
Below Saving A/c returns period as % of total 
Cycles 33% 19% 15% 1% 0%
      
Average Return 16.8% 14.7% 14.7% 15.5% 15.9%
Maximum Returns 99.1% 62.9% 49.0% 31.1% 22.7%
Minimum Returns -52.4% -13.8% -5.2% 3.8% 6.8%
Sensex Total Return Index from Aug 1996 till Apr 2019
Source - Bloomberg
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Implementing a Multi Asset Strategy
There are two ways to go about it:
1)DIY investing
• Need time/ inclination / knowledge
2)Solutions
• Readymade Solutions
• Guidance
• Tools
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Potential DIY Strategy: Fixed Sources of Income + 
Future Investment Growth
BROAD ASSET ALLOCATION:
12 MONTHS EXPENSES IN “SAFE PLACES”
3 MONTHS IN A BANK ACCOUNT
9 MONTHS IN THE QUANTUM LIQUID FUND / 
QUANTUM MULTI ASSET FUND*
THE REST OF THE MONEY:
80% EQUITY, (QUANTUM LONG TERM EQUITY VALUE FUND, QUANTUM EQUITY 
FUND OF FUNDS, QUANTUM ESG INDIA FUND)
20% QUANTUM GOLD SAVINGS FUND
*Can lose capital in the near term….preferably own with a >3 year view.
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Features of Ready made Solutions
• Diversified – Three asset classes
• Unbiased allocations
• Flexible approach
• Investments strategy  and Process – Valuation metric
• Dynamic allocation – Value add
• Low cost
• Track record – Upcycle , Downcycle, long term
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Let’s Summarize 
• Your Savings Mantra should be: Income – Savings = Expenses
• Work on the right Asset Allocation to achieve your financial goals 
• Investor emotions typically run opposite to sound decision making
• Mutual Funds can be used effectively to invest across Asset Classes
• Cost of investing matters over a long period
• Investing in Equities is a must for your long term goals
• A high-risk portfolio often doesn’t bring commensurately high returns
• Drastically modifying one’s allocation in reaction to market swings may feel natural but realize 
you may only be taking from your future self.


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Disclaimer – Terms of Use
For AMFI/NISM Certified partners only. For private circulation only.  Mutual fund investments are subject to market risks, read all 
scheme related documents carefully.
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.