Quant MF: What should investors do? 🤷‍♂️

ByNinad Mondkar

The Securities and Exchange Board of India (SEBI) has started an investigation into Quant Mutual Fund. This is because the regulator has observed front running by someone in the fund.

Why does it matter?

  • Front running is a prohibited practice in capital markets. Someone aware of the upcoming large trades in the future uses the information for personal advantage.
  • This allows the front-runner to make quick profits based on the significant trading positions taken by, in this case, mutual funds.
  • Quant MF is one of the fastest-growing mutual fund houses with an AUM of ₹ 93,000 Crores. And it has done that in a little over six years!
  • Investors have redeemed investments worth ₹1,300 Crores in three days after the news!

Zoom In

  • Trust and ethical behaviour are the bedrock of all relationships. Be it personal or professional. And financial services is no exception!
  • Most retail investors new to the markets preferred investing in Quant MF due to their excellent performance in the last few months, which has helped them amass a sizeable AUM.
  • In the past, Axis Mutual Fund (https://tinyurl.com/2mtscr6s) and HDFC Mutual Fund (https://tinyurl.com/y6c5rqms) were under investigation for front-running too. And those found in contravention of the rules were punished.

What next?

  • At this stage, the investigation is ongoing, and nothing can be said for sure.
  • Investors should avoid making any fresh investments in the fund.
  • Investors should closely monitor further developments and official communications from SEBI and Quant MF.
  • It is also a good time for investors to reassess their portfolio diversification and asset allocation strategy.