PrimeInvestor issues exit call on Quant MF schemes

Mumbai: Chennai based PrimeInvestor, an investment recommendation platform, has issued an ‘exit call’ on all the equity and hybrid funds of Quant Mutual Fund, after reports that Sebi has conducted search operations at the premises of Quant Mutual fund. “We are now uniformly issuing an exit call on all the equity and hybrid funds of Quant AMC, whatever be their call earlier,” says Prime Investor in a note to investors.

PrimeInvestor said the risk of such front running news is two-fold. One, there will be redemption pressure on the AMCs’ funds; and secondly, the stocks (if disclosed or rumoured) on which such front-running was allegedly done may come under selling pressure, it said.

PrimeInvestor said it is worried about likely redemption pressure on the AMC’s funds. “For an AMC like Quant, with a good proportion of mid- and small-cap stocks or low float stocks, high redemption pressure can start impacting NAV and cause damage to the remaining investors,” the note said. “While this call may seem rather hurried; however, simple news like this, the actual impact of such front-running notwithstanding, can cause enough damage to sentiment in the AMC and impact redemptions,” the investment advisor said.

PrimeInvestor said an exit is further necessary in Quant funds on the grounds that many of their stocks are momentum plays, and sudden redemptions and disruptions in inflows can have a greater impact on such strategies.