With the help of computer models, Quant Mutual Fund has swept the Indian market in recent years, increasing assets by nearly 400 times and producing 560% returns. However, the most recent regulatory investigation in India threatens that phenomenal growth.
According to people familiar with the situation, the Securities and Exchange Board of India is investigating claims that Quant Mutual Fund staff members engaged in front-running trades. The Mumbai-based company reported receiving inquiries from the regulator and fully complying with the requests. The company’s assets have increased to 930 billion rupees ($11 billion) from 2.4 billion rupees in 2019.
The investigation brings to mind recent instances that prompted waves of redemptions at once high-flying money managers for investors in mutual funds in India. Employees of Axis Mutual Fund were found to have engaged in illicit trading by SEBI in 2022, and HDFC Asset Management Co. met a similar end.
“Investors don’t wait and think—they redeem when such news comes,” said Vidya Bala, co-founder of Primeinvestor.in, an investment platform advising investors to sell Quant Mutual’s funds. According to her, Axis Mutual is “still struggling to return to their past glory” and has faced intense pressure to redeem itself.
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