Quest Flagship
Quest PMS | Equity | | PMSIME's View on Quest Flagship
Strategy
Investment Fund
The stratgey can be considered for investment on the back of the strong pedigree of the AMC & investment team, even as performance in recent times has been average.
Fund's Strategy View
Quest Flagship PMS follows a flexible investment mandate (sector & market cap agnostic, no specific style focus), that provides the fund manager with a high degree of flexibility to build a portfolio based on the current market dynamics. The strategy has demonstrated resilience and maturity since its inception, navigating through various market phases and establishing a decent track record.
Fund Performance
The fund has underperformed peers & is amongst the worst performing schemes in this category in the last 5 year trailing returns. In terms of longer-term annual performance, performance has been consistent, with the fund having outperformed it's benchmark in over 60% of annual calendar years.
IME's View on Quest PMS
View on AMC
Quest AMC, founded by Ajay and Bharat Sheth, has added Aniruddha Sarkar to their team from IIFL. The AMC has all the ingredients - equity pedigree, experienced team, scale, well-articulated flexible philosophy and good performance track record. Investors, specifically looking for a sector rotation investment approach, could consider the AMC.
AMC's Pedigree
Quest was established in 1987 as an equity research house specialising in midcap and smallcap companies. They launched their Portfolio Management Services (PMS) in 2007 and have over 15+ years of experience managing investor money in Indian equities. They have remained focused on equities without diversifying into other business lines.
AMC Team
The Quest investment team is led by co-founder Bharat Sheth, with over 25 years of investment experience at Quest. The stability of the investment philosophy is supported by having a co-founder as the CIO. Aniruddha Sarkar, the Fund Manager, has a strong track record at IIFL and works closely with Sheth in the investment decision process. The key risk is the departure of Aniruddha, who has been a good addition to the team, given his lack of ownership in the firm.
Investment Philosophy
Quest Investment Advisors follows a multi-pronged investment approach, summarised by the acronym "QUEST" - Quality, Earnings, Sector Rotation and Timing. They employ a blend of value and growth investing styles, seeking mispriced opportunities in both segments of the market.
Investment Strategy
Quest PMS follows a balanced value-and-growth investment approach, aiming to capture opportunities across market cycles by dynamically allocating capital across value, re-rating, and growth segments. The strategy is sector- and market-cap agnostic, with portfolio weights actively adjusted based on relative valuation comfort, earnings visibility, and cycle positioning.
Portfolio Segmentation
- Value (15–25%): Undervalued businesses in cyclical or out-of-favour sectors such as capital goods, autos, cement, and telecom
- P/E Re-rating (35–45%): Companies benefiting from improving fundamentals and valuation normalization; sectors include PSU banks, power, real estate, and home improvement
- Growth (35–45%): Structural growth businesses with strong earnings visibility; sectors include financial services, IT & IT services, and specialty chemicals
Portfolio Management Approach
- Avoiding the Herd: Focus on differentiated ideas with low overlap versus mutual funds and peer PMS strategies
- Active Cash Management: Ability to raise cash levels up to ~15–20% during periods of extreme market stress
- Style Rotation: Regular profit booking when valuations run ahead of fundamentals and risk-reward turns unfavourable
Preferred Stock Attributes
- Strong and credible management with a consistent execution track record
- Leadership position within the sector with scope for margin expansion
- Large addressable market with limited competitive intensity
- Businesses at an inflection point (“Y2K-style” moments of growth or disruption)
- Healthy and sustainable cash-flow generation
- Comfortable and manageable leverage levels
AMC Background
Quest was set up in the 1980s by Ajay Sheth as an institutional equity research firm with a strong focus on small and mid-cap stocks. Building on its deep research heritage, the firm launched its PMS business in 2007 and has since scaled into one of the larger PMS houses in India, typically ranking in the top 10–20 by scale.
Quest brings over three decades of experience in listed Indian equities, with a long-standing focus on small and mid-caps. The investment team is anchored by co-founder and CIO Bharat Sheth, who brings over 25 years of hands-on investment management experience. The presence of a founder-CIO provides stability and continuity to the firm’s investment philosophy and processes.
Investment Philosophy
Quest follows a principle-driven investment philosophy focused on owning high-quality businesses with strong management, scalable growth opportunities, sound financials, and reasonable valuations, with an explicit emphasis on downside protection.
Core Investment Principles
- Management: Unquestionable integrity, governance, and execution capability
- Business Quality: Leadership position, pricing power, and non–“me too” models
- Profitability: Strong and improving ROE with stable or expanding margins
- Scalability: Exponential growth potential driven by large addressable markets
- Financial Strength: Strong cash flows, resilient balance sheets, and below-industry leverage
- Valuation: Adequate margin of safety embedded in entry price
Portfolio Construction
Portfolio construction is market-cap and sector agnostic, combining top-down sectoral insights with bottom-up stock selection. The team remains agile across cycles, actively rotating across sectors and managing cash levels to take advantage of market volatility, with the objective of delivering superior risk-adjusted returns.
Barbell Portfolio Structure
- Growth Stocks (35–45%): Cycle-resistant businesses (e.g. financials, NBFCs, consumer discretionary) with high EPS growth and high ROCE
- Re-rating Stocks (35–45%): Companies in expansion or disruption phases (technology, chemicals, pharma, select consumer discretionary) with improving ROEs and mid-teen EPS growth
- Value Stocks (15–25%): Downcycle sectors (capital goods, autos, cement, telecom) available at deep value with low-teen ROE/ROCE and earnings recovery potential
Portfolio Philosophy: The barbell approach allows Quess to participate in long-term value creation through growth companies while simultaneously capturing value discovery opportunities during cyclical downturns.
Suitable For
Investors seeking an established, research-driven investment manager with the flexibility to navigate multiple market cycles through a balanced growth-and-value portfolio construction approach.
Trailing Performance
| 1yr | 3yr | 5yr | Since Inception | |
|---|---|---|---|---|
| Quest Flagship | -8.6 | 13.6 | 15.6 | 15.9 |
| S&P BSE 500 | 4.9 | 14.6 | 17.2 | 10.9 |
| Alpha over Broad Mkt BM | -13.5 | -1 | -1.6 | 5 |
Performance as of: 30-Nov-25 | Inception Date: 12-Oct-07 | Performance are post-fees, pre-taxes. Global funds denominated in USD or fund currency.
Investment team
Bharat Sheth | 5-star rated FM
Head Equities | 46 yrs Experience | 32 yrs at current firm
Bharat Sheth is a highly seasoned & respected investment professional, having spearheaded the growth of Quest's advisory & PMS business over the past 25 years. Being part of the core founding team, he has provided the much-needed stability and thought leadership that has helped Quest grow into one of the larger PMS providers in India.
Aniruddha Sarkar | 4-star rated FM
CIO | 17 yrs Experience | 6 yrs at current firm
Past Experience: IIFL AMC (FM)
Aniruddha joined Quest in Feb-2020, after a successful stint of over 10 years at IIFL across various roles including Fund Manager for the MF & PMS and as a research analyst.
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