Quant Mutual Fund’s June Stress Test: 30 Days Needed to Liquidate 50% of Small-Cap Portfolio

Investor Worries and SEBI Investigation

Following allegations of front-running, the Securities and Exchange Board of India (SEBI) has launched a probe into Quant Mutual Fund. This has raised concerns among investors about the safety of their investments in various Quant MF schemes.

Stress Test Results: Liquidity of Small-Cap Portfolio

Quant Mutual Fund released the stress test results on July 1 for June, revealing that it would take 30 days to liquidate 50% of the small-cap portfolio and 15 days to liquidate 25%. These results are a key indicator of how the fund would manage a high volume of redemption requests.

Comparison with May Stress Test Results

In May, the stress test results indicated that the small-cap portfolio would take 28 days to liquidate 50% of its holdings and 14 days to liquidate 25%. The slight changes in these numbers highlight the ongoing monitoring and adjustments within the fund’s management.

Mid-Cap Portfolio Stress Test Results

The June stress test for the Quant Mid Cap Fund revealed that it would take 10 days to liquidate 50% of its portfolio and 5 days to liquidate 25%. These figures provide a sense of security for investors in mid-cap schemes, demonstrating quicker liquidity compared to small-cap funds.

SEBI Mandate on Stress Tests

Since March 2024, SEBI has required mutual funds in India to publish monthly stress test results for their small-cap and mid-cap funds. These stress tests are designed to evaluate the fund managers’ ability to liquidate portfolios swiftly during market turmoil. The first set of stress test disclosures was made available on March 15, 2024.

Growth and Investment Strategy of Quant Mutual Fund

Quant Mutual Fund has experienced remarkable growth in its Money under Management (MuM), from Rs 166 crore in December 2019 to Rs 90,500 crore in June 2024 (as of June 28). The fund’s success can be attributed to its robust and differentiated investment framework, which allows it to anticipate market trends and remain relevant in the industry.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions