Quant Mutual Fund has launched the Quant Manufacturing Fund, an open-ended equity scheme. The scheme is centered on the manufacturing theme and invests in companies engaged in manufacturing business. The New Fund Offer (NFO) is available for subscription from July 26, 2023, and the issue will remain open till August 8, 2023, with no entry or exit load charges. Investors can start with a minimum subscription amount of Rs 5,000 and can add multiples of Re 1 subsequently.
According to the fund brochure, the scheme's performance will be measured against the Nifty India Manufacturing Index, and it will be managed by Sandeep Tandon, Anikt Pande, Sanjeev Sharma, and Vasav Sahgal. The fund house relies on their proprietary quantitative model, so the fund will also be managed based on in-house quant model.
This is the fifth manufacturing fund in the Rs 44 trillion mutual fund industry. Out of six of them ICICI Prudential Manufacturing Fund and Kotak Manufacture in India are actively managed fund. Navi Nifty India manufacturing fund is passively managed index fund while Mirae Asset Nifty India Manufacturing is an exchange-traded fund (ETF). Mirae also offer Fund of Fund which invests in the parent scheme Mirae Asset Nifty India Manufacturing fund.
According to brand equity foundation report, “Manufacturing is emerging as an integral pillar in the country’s economic growth, thanks to the performance of key sectors like automotive, engineering, chemicals, pharmaceuticals, and consumer durables. The Indian manufacturing industry generated 16-17 per cent of India’s GDP pre-pandemic and is projected to be one of the fastest growing sectors”. The foundation also forecasts that India has the capacity to export goods worth US$ 1 trillion by 2030 and is on the road to becoming a major global manufacturing hub.
Fund houses are betting on these emerging opportunities in manufacturing space. As far as performances of the existing schemes are concerned, majority of them have less than three years track record. ICICI Prudential Manufacturing Fund, one of the oldest and second largest schemes, has delivered 31 per cent in last three years. In last one year, most of the schemes have delivered in the range of 19-22 per cent except ICICI Prudential Manufacturing Fund which delivered highest 30 per cent.
Should you invest?
Remember that Quant Manufacturing Fund is a thematic fund. Keep in mind that thematic funds are subject to sector-specific risks. Economic downturns, changes in government policies, or technological disruptions can affect the manufacturing industry, impacting the fund's performance. If you already have adequately invested in diversified equity funds, and want to take any exposure, you may consider investing in a sector fund which has proved its mettle.
