Quant MF escapes panic redemptions: distributors take wait-and-watch mode

Fund advisors do not see any immediate impact on the performance of Quant Mutual Fund schemes because of the ongoing investigation.

Investment advisors are telling investors to stay invested in Quant Mutual Fund schemes while being watchful of regulatory developments

Investors are adopting a wait-and-watch approach with respect to their investments in Quant Mutual Fund, distributors and investment advisors Moneycontrol spoke to said. Most of them stated that they have yet to activate any redemptions for their clients —either on their own or at the request of their clients.

“We have advised investors to wait for the investigation's findings before reacting. Traders may need to react to news, not investors. Investors in mutual funds should act only after the investigation is complete,” said Feroze Azeez, Deputy CEO of Anand Rathi Wealth. This sentiment is echoed by several distributors and investment advisors.

Another fund distributor, Amol Joshi, said, "Investors are currently very much guarded because the performance has been speaking for itself for the last few years. We will wait for more information."

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Fund advisors do not see any immediate impact on the performance of Quant Mutual Fund schemes because of the ongoing investigation. Since Quant’s schemes have thus far exhibited outstanding performance, it’s best not to react, they said.

On June 24, Fisdom, a financial broking app, put out a note elaborating on factors which make it unlikely there would be  any run on the fund. Their note suggested that with assets spread across nearly two dozen dedicated equity funds, a vastly distributed portfolio of clients, a steady SIP book, and liquid stock holdings, Quant Mutual Fund is well-placed to shield against a run on the fund.

Fisdom also recommended that longer-term equity investors, including SIP/STP investors, continue to hold on to existing investments. Fisdom said it has retained ratings across all the 21 funds managed by Quant, but has assigned a 'Watch' outlook, given the sensitivity to the SEBI investigation.

Currently, the only notable distributor to officially advise an exit from Quant Funds has been Prime Investor. In a note on their website, the distributor has issued an exit call on all the funds of Quant AMC. Explaining their decision, Prime Investor said that while the call may seem rather hurried and investors may prefer to wait and watch, their stance is to take a conservative view on the potential fallout if the news is indeed confirmed and as details emerge.

The report added that an exit is further necessary in Quant funds given that many of their stocks are momentum plays, and sudden redemptions and disruptions in inflows can have a greater impact on such strategies. Notably, Prime Investor was also the first to recommend exits Franklin Templeton’s funds when major irregularities with their debt fund came to the fore in 2020.

Gurpreet Sidana, Chief Executive Officer at Religare Broking, however, cautions investors about potential long-term impacts. "Quant Mutual Fund is a very large fund. If such allegations are proven to be true, then funds will be adversely impacted.” In an interview with Moneycontrol on June 24, Dhirendra Kumar, CEO of Value Research, a mutual fund tracking firm, also advised investors to stay invested in the fund while urging them to diversify and not hold only one mutual fund.

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​​​