Investors in Quant Mutual Fund withdraw Rs 2,800 crore during Sebi investigation

According to a report by Value Research Online, Quant Mutual Fund experienced its initial weekly withdrawals of 2024 in the last week of June, amounting to Rs 2,800 crore, amid an ongoing Sebi probe for alleged front-running. This exit ended six months of fund house receiving positive inflows.

Between June 24 and June 30, there was a total outflow of Rs 2,800 crore, equivalent to around 3% of the assets under management (AUM) from the previous week. The Quant Small Cap Fund, with assets totaling Rs 21,423 crore as of May 2024, experienced the largest outflow of funds, making up 28% of the total outflow for the final week of June.

Moving on to the outflows in Quant funds according to their AUM, Quant PSU Fund experienced the largest outflow of approximately Rs 80 crore, accounting for 8% of the fund's total assets as of June 21, 2024. Value Research's report shows that Quant's top five mutual funds experienced outflows in the final week of June after being accused of front-running. After the accusations, Quant Small Cap Fund, the biggest scheme under the management of Quant Mutual Fund, experienced a withdrawal of Rs 809 crore. As of June 2024, the scheme controls assets worth Rs 22,967 crore.

The report also pointed out that the top five funds of Quant Mutual Fund have raised their investment in HDFC Bank and Reliance Industries.

Quant Small Cap Fund raised its investment in Reliance Industries by 1.16% and in HDFC Bank by 1.52%. Quant Mid Cap Fund has raised its investment in Reliance Industries by 1.30% and by 0.56% in HDFC Bank.

Sebi, the market regulator, was looking into a potential case of front-running concerning Quant MF, which oversees assets valued at Rs 93,000 crore. This has sparked worries among many investors regarding the safety of their investments.

This was not the initial occurrence of front-running in mutual funds. In a prior incident with Axis Mutual Fund, SEBI prohibited the fund's dealer and 20 other entities from the securities market, confiscating illegal profits totaling Rs 30.55 crore. In 2007, HDFC Mutual Fund was involved in another front-running incident as reported.