Quant Mutual Fund: SEBI has taken action against Quant Mutual Fund in front running case. Market regulator SEBI has taken action against Sandeep Tandon-owned Quant Mutual Fund on suspicion of front-running. Now investors are worried due to the action on Quant. In such a situation, what should investors do now?
Table of Contents
- About Quant Mutual Fund
- Top Searchable Points
- What is Front Running?
- What are experts saying?
- What will be the impact?
- Continue their SIP or stop it and exit
- Quant Mutual Fund Performance
- FAQs
About Quant Mutual Fund
Quant mutual fund is a special type of mutual fund in which investment decisions are taken on the basis of mathematical techniques. It uses data analysis, algorithms and computerized models that study investors’ investment preferences and market signals. This fund is different from normal mutual funds as it is based on more sensitive and systematic investments.
Special attention has been paid to increasing the expected returns of quant funds. For the financial year 2023-24, these funds have sought to provide higher than expected returns to their investors. Additionally, fund managers have promoted various technical and risk appetite measures for investment.
Top Searchable Points
- SEBI has taken action against Quant Mutual Fund in front running case
- Investors worried due to action on quant mutual funds
- Investors are wondering if their money is safe
What is Front Running?
After the news of SEBI investigation into Quant Mutual Fund for suspicious front-running, investors have started questioning whether their money is safe in the fund. Front-running is an illegal practice. In this, the fund manager, management or other employees place their own orders before finishing large trades of the fund to make profits from the expected price movement and make personal profits.
According to reports, market regulator SEBI has taken action against Sandeep Tandon-owned Quant Mutual Fund on doubt of front-running. SEBI conducted search, removal operations at the company’s Mumbai headquarters and Hyderabad offices. Its dealers and associates have been questioned in the investigation. Meanwhile, the fund house has said that it is committed to fully cooperate with the regulator. Quant told investors that we want to assure you that we are always fully committed to cooperating with the regulator during any review.
What are experts saying?
Tradejini’s COO Trivesh D says, ‘Investors should understand well that the doubt of front running is not on the fund house but on an individual. If he is found guilty after investigation, he will be thrown out of the company. What often happens is that if an employee or management is front-running then that fund goes down consistently, but in case of quants the performance is consistently good. In such a situation, there is no need for investors to panic selling, redeem, transfer or switch. This fund, which is running on quantitative analysis, has 15% investment in small cap scheme in RIL, Jio, HDFC.
What will be the impact?
Kartik Jhaveri, director at Transcend Capital, says this is not the first time a fund manager has been investigated by SEBI for front-running. Therefore, investors should not be unnecessarily worried. Their investments are safe. Mutual funds have diversified their portfolios with stocks. Therefore, this investigation is not expected to affect Quant’s performance.
This question is also running in the minds of investors of Quant Mutual Fund whether they should continue their SIP or stop it and exit.
Certified Financial Planner Rajesh Minocha has said that at present SEBI is only investigating. No decision has yet come from SEBI on this front running issue. The investment method of a quant company is completely different. The company does not invest based on the discretion of its fund manager but uses quantitative investment method.
If the company changes its fund manager in the coming time, its impact will not be visible on the investment methods because the company makes investments based on algorithm.
Quant Mutual Fund Performance
Quant Mutual Fund has been a top player across a variety of equity categories for multiple time periods. For example, Quant Small Cap Fund has given returns of 495 percent to its investors in the last 5 years. Whereas mid cap fund has made a return of 348 percent in the last 5 years.
This is not the first case of front running in the mutual fund industry, earlier Axis Mutual Fund and HDFC Mutual Fund have faced such cases.
FAQs
Investing in mutual funds promotes long term investment. Financial advisors recommend running SIP for at least 6 to 8 years. However, if your goal is big and there is time for it, then you can continue SIP for 15 to 20 years.
For example, if a fund’s beta is 1.2, it means that the fund is 20% riskier than its benchmark. If the benchmark falls 1%, the fund will fall 1.2%. When you look at the beta of a stock or a fund, it is important to understand that beta only measures relative risk.
Money invested in mutual funds can also be lost. Therefore, invest your money very thoughtfully here also. Only investment with right strategy will give you profit.
There is no single answer to which mutual fund is best. The best mutual fund depends on your financial goals and risk tolerance. Equity funds provide growth potential, debt funds provide stability, ELSS funds provide tax benefits, and ETFs provide diversification.
You can choose lump sum investments on a monthly basis, but SIPs offer greater risk mitigation through rupee cost averaging. Why is lump sum investment better? Lump sum investing can be beneficial when you have a lump sum amount available, allowing immediate capital investment. This may also be appropriate during market opportunities.
