With everyday growing markets, we saw a relatively new player in the market making nearly a 400-fold jump in the assets as a mutual fund company making it one of the most popular choices for retail investors – Quant Mutual Fund. Particularly the small-cap fund scheme, took the market by storm delivering exceptional returns for a while with a consequent aftermath of which many of us are a part of.
What is cooking?
On June 26, 2024 – Quant Mutual Fund made it to the headlines amid allegations made by SEBI against the AMC for front-running suspicion. For people new to the lingo, front-running is an illegal practice where fund managers place orders selectively in advance when they know big trades are about to happen soon thanks to insider news from their sources. While the SEBI has been prompt to take corrective measures here and in the past, it doesn’t seem we have it all figured out to be totally fraud-proof yet.
While the complete details are still awaited, the market did not take too long to sense the smoke out of this wildfire. By the end of the week, we have the statement of the founder and CEO – Mr. Sandeep Tandon, acknowledging the fact that massive redemptions totalling approximately INR 1400 Crore have taken place putting a significant dent in the asset value as well as the reputation of the firm.
What comes next?
Official response of the company might not give us a clear picture so far but it is clear of the company’s response that inquiries made by SEBI are not mere rumours. Giving it a professional turn, the Quant Mutual Fund company stated that it is fully committed to cooperating with the regulator and providing necessary details/data as and when required.
The impact that this news has had on the market can be seen as a wake-up call for MF companies but the major concern to look at is the nature of this incident. Our team tried to dig deep but we have not yet found out whether these front-running acts are a systematic issue involving the company’s intent to act accordingly or was it a mere individual greed. Since fund managers are often at the centre point of such investigation, the truth shall not be hidden for long.
Either ways, strict corrective actions coming out SEBI’s arsenal are expected in the best interest of individual investors who put in their hard-earned money with hopes to generate wealth, be it for the short term or long enough to put one in financial depression.
What’s in it for me?
Like us all, if you are a retail investor worried about what happens to your money invested in any of the Quant schemes, experts believe that there is no reason to panic at this moment since there is no clarity officially provided by any of the parties as to what is the next course of action is supposed to be; so long story short – HOLD for now.
The fear of financial losses definitely grips us all, given that the investors do depend on the AMC with all the risks and security of their money at present and in future, we still need to understand that the investments made by the company go into different sectors that have actual businesses working hard around the clock to make their profits. Also, mutual funds can be subjected to market risk but the AMC compliance is regulated by SEBI and it will ensure that the wealth of common people would not get wiped out on account of the company’s mistake (if any at all)
Meanwhile, if you are a beginner with mutual funds investments and are about to begin with an SIP with quant, we would suggest you to wait till the dust settles and more information is out for us to decide.
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