A Comparative Analysis of Bandhan and Quant Mutual Funds

The world of mutual funds is dynamic, and investors often find themselves at a crossroads when choosing the right fund for their portfolio. In the realm of small-cap funds, two titans have emerged, each with its unique strengths and shades. This article delves into the performance and characteristics of the Bandhan Small-Cap Fund – Direct Plan-Growth and the Quant Small-Cap Fund – Direct Plan-Growth, shedding light on their achievements, disparities, and factors influencing their SIP returns.

Performance Overview:

As of February 28, 2024, the Bandhan Small-Cap Fund boasts an impressive Net Asset Value (NAV) of Rs 34.94, showcasing a remarkable 71.26% return over the past year and an astounding 249.43% since its inception in 2020. Meanwhile, the Quant Small-Cap Fund, a Goliath in this space, presents an NAV of Rs 252.87, delivering an equally commendable 72.05% return over the past year and an astonishing 641.33% since its inception in 2013.

SIP Returns Analysis:

A fascinating aspect comes to light when evaluating the SIP returns of these funds. While both funds have matched in absolute returns over the past year, a discrepancy arises in the SIP returns. A monthly SIP of Rs 10,000 in the Bandhan Small-Cap Fund would have grown to Rs 1,65,615 with a total investment of Rs 1,20,000 over one year. On the other hand, the Quant Small-Cap Fund, with a similar SIP, would have produced Rs 1,68,520. What factors contribute to this variance?

Factors may be the reason for this disparity:

• NAV Fluctuations: Daily fluctuations in NAV, indicative of underlying asset performance, can impact SIP returns. Despite similar overall annual returns, nuanced differences in NAV fluctuations can lead to disparate SIP returns.
• Timing of SIP Investments: The timing and frequency of SIP investments, influenced by market fluctuations, play a crucial role. Even with comparable annualized returns, variations in the timing of investments can contribute to differences in SIP returns.

Understanding Asset Allocation:

Asset allocation is a critical aspect of mutual fund investing. The Bandhan Small-Cap Fund allocates 91.47% of its investments to domestic equities. Notably, it allocates 2.6% in large-cap stocks, 17.02% in mid-cap stocks, and 50% in small-cap stocks. In contrast, the Quant Small-Cap Fund allocates 92.42% to domestic equities, with 13.84% in large-cap stocks, 6.96% in mid-cap stocks, and 47.39% in small-cap stocks. Additionally, it holds 1.01% investment in Debt, primarily in Government securities.

Conclusion:

Choosing between funds requires a good understanding of their performance, SIP returns, and asset allocation. While both funds have excelled in absolute returns, the intricacies of SIP returns underscore the importance of considering factors like NAV fluctuations and the timing of investments. Investors must carefully analyse their risk tolerance, investment goals, and market conditions before making an informed decision on which small-cap fund aligns best with their financial objectives.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.