Quant Mutual Funds on Thursday issued a set of FAQs (frequently asked questions) for its investors in a bid to clear the air on the current controversy. on Sunday, it was reported that the Securities and Exchange Board of India (SEBI) has started a probe into its alleged front-running activities.
Investors of Quant Mutual Fund, who have been mulling over the issue, have redeemed investments worth about Rs 1,400 crore in 3 days following Sebi’s investigation.Notably, Quant Mutual Fund manages a total of 21 equity mutual fund schemes, with four of these schemes holding cash portfolios exceeding Rs 1,000 crore.
On Wednesday, Quant Mutual Fund’s founder and CIO Sandeep Tandon assured that the fund house was fully cooperating with Sebi and his team is providing data to SEBI regularly.
In the fresh set of FAQs for investors, Quant MF said:
1. Has the SEBI enquiry concluded?
No, it is a regular ongoing process globally by the regulator to collect data and analyze it.
2. Has anyone been convicted?
No. It is the regulator’s job to collect and analyze data on an ongoing basis. We have not received any communication after initial enquiries.
3. Are there any SEBI team personnel stationed in your office?
We have not heard from the regulators after their visit and no one is stationed in our office.
4. Are your offices functioning normally?
We have only two offices in Mumbai (Prabhadevi and Bandra) and both are functioning normally and at full capacity.
5. Are all team members attending office?
Yes. Everyone including sales, investment, dealing, finance, IT and others are working normally.
6. Can the team at quant MF deliver similar returns after this enquiry?
Returns are a by-product of research capabilities and style of management. In quant, we manage risk dynamically to give superior risk-adjusted returns. As mentioned, we are functioning normally and hence, the performance should be at par with our style.
7. What is the liquidity situation of the portfolio?
As of 26th June, cash and liquid investments were 53.49% of closing equity AUM of INR 88,270cr and over the last three days, net redemptions have totaled only 1.5% of closing AUM, which is a small figure.
Assuring investors of the fund’s liquidity, risk management,CIO Tandon said: "Throughout our history, quant Mutual Fund has demonstrated resilience and outperformance in challenging circ*mstances, such as during the Hindenburg fiasco and the recent Indian general elections, where we strategically managed our portfolio to mitigate risks associated with public sector banks and PSUs, showcasing a mature and balanced approach to portfolio management."
He added that the AMC had a track record of navigating market uncertainties, including accurately predicting market movements such as Nifty surpassing 24,000 and Bank Nifty potentially reaching over 54,000 in CY ‘24.
He further said: "We have noticed that certain media reports are creating narratives that do not accurately reflect the true picture. These market narratives have driven certain investors towards reacting to ‘Perceived risk.’ Perceived risk is a subjective judgment of an individual.Gauging actual risk would entail quantifying aspects of perceived risks, such as the likelihood, the susceptibility and the severity of the risk. Those investors who chose to react to perceived risk without realizing that the actual risk to this negative event has not changed materially, have over-reacted."
