Mumbai: Sandeep Tandon, chief executive of Quant Mutual Fund, which is under scrutiny for charges of so-called front-running, is seeking to assure investors that the allegations are overblown and they should not redeem their investments in panic.
Teams of officials from the Securities and Exchange Board of India paid surprise visits to Quant’s offices in Mumbai and Hyderabad on 21 June for a search and seizure operation triggered by suspicion of front-running by Quant’s employees.
“Look around you. Do you see any disruption? We are all carrying on our usual work,” said Tandon when this reporter visited the Quant MF office in Mumbai.
In a statement on Monday, the company said it wanted “to assure you that Quant Mutual Fund is a regulated entity, and we are always fully committed to cooperate with the regulator throughout any review”.
Ample liquidity
Front-running is an illegal practice where fund managers, dealers or brokers aware of upcoming large trades place their own orders beforehand to profit from an anticipated price movement when the large trade is executed.
Tandon emphasized that the asset management company had ample liquidity to meet redemptions. About ₹800 crore has been redeemed from Quant since the news broke. This, however, accounts for less than 1% of Quant’s total assets under management.
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Quant Mutual Fund is among India’s fastest-growing mutual funds with assets under management of more than ₹90,000 crore.
About 53% of Quant’s AUM is in liquid instruments—large-cap stocks or cash equivalents—and can easily be redeemed, Tandon said.
What investors should do
So far, Sebi has not filed any official charges against Quant Mutual Fund. The matter is at the information-gathering stage.
That said, Quant Mutual Fund has ample liquidity to meet redemptions even in its small-cap fund (34% in large cap, plus cash). Hence, any panic redemption at this stage may not be wise.
But keep a close watch on the situation. If further adverse news emerges related to the front-running allegations, there may be a case to make an exit.