Major Redemption of Rs 1,398 Crore in Quant MF After SEBI Front-Running Allegations

Ample Liquidity to Handle Redemptions

Quant Mutual Fund has sought to calm investors’ concerns about redemption pressures, assuring them that it possesses sufficient liquidity to manage any potential scenarios. In a recent conference call, Sandeep Tandon, Founder and CIO of Quant MF, revealed that the net outflow in recent days amounted to only Rs 1,398 crore, representing a mere 1.5% of the total assets under management (AUM).

High Liquidity Levels

As of June 25, Quant MF has maintained 54% of its total assets in liquid form. This includes cash, government securities, debt instruments, large-cap stocks, gold, and silver. Tandon emphasized that even excluding mid and small-cap stocks, the fund has Rs 47,640 crore in liquid assets. Additionally, they have borrowing lines of approximately Rs 650 crore to address any contingency situations.

Impact on Equity Schemes

The fund has experienced significant redemptions, particularly in its equity schemes, following an investigation by the capital market regulator SEBI into front-running activities. By the end of May, Quant MF had around 21 equity schemes. Among these, four schemes held over Rs 1,000 crore in cash, with the Quant Small Cap Fund having the highest cash holding of Rs 1,607 crore. The total equity AUM for small-cap schemes stood at Rs 19,635 crore.

Changing Investment Strategies

Tandon noted a shift in the market dynamics at the beginning of the year, marking the end of an easy bull run phase. In response, Quant MF strategically increased its exposure to large-cap stocks, moving away from mid and small-cap stocks. This shift is not due to a negative outlook on mid and small-caps but rather a risk management strategy to enhance liquidity.

Impressive Performance

Despite the challenges, Quant Mutual Fund has delivered exceptional risk-adjusted returns. The fund’s AUM has surged from Rs 27 crore in September 2020 to Rs 93,000 crore, reflecting the trust of about 84 lakh investors.

Conclusion

Quant Mutual Fund remains confident in its ability to manage redemption pressures, backed by robust liquidity and strategic adjustments in its portfolio. The fund’s proactive measures aim to ensure stability and continued growth, providing reassurance to its extensive investor base.

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.