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Quant Mutual Fund schemes fall 2.50-6.28%. What should you do?


Quant Mutual Fund schemes have fallen more than their benchmark and category in the last one week. According to mutual fund advisors, Quant schemes are falling mainly because they have exposure to the battered Adani Group. Most mutual funds did not have investments in Adani Group companies. Only their index schemes and ETFs had exposure to Adani stocks.

However, Quant Mutual Fund had investments in the Adani Group stocks as it follows a quant based investment strategy. Quant Mutual Fund follows the VLRT framework. (See table: Quant schemes and investments in Adani stocks)

Quant schemes exposure in Adani stocks
Scheme Name Company Name Holding
(as % of AUM)
Quant Absolute Fund Adani Ports and Special Economic Zone 6.12
Quant Absolute Fund Ambuja Cements 6.11
Quant Active Fund Adani Ports and Special Economic Zone 4.78
Quant Active Fund Ambuja Cements 6.77
Quant ESG Equity Fund Adani Ports and Special Economic Zone 7.04
Quant Flexi Cap Fund Adani Ports and Special Economic Zone 6.96
Quant Flexi Cap Fund Ambuja Cements 2.02
Quant Focused Fund Adani Ports and Special Economic Zone 6.45
Quant Infrastructure Fund Adani Ports and Special Economic Zone 7.81
Quant Infrastructure Fund Ambuja Cements 8.27
Quant Large & Mid Cap Fund Adani Ports and Special Economic Zone 5.27
Quant Large Cap Fund Adani Ports and Special Economic Zone 7.96
Quant Mid Cap Fund Adani Ports and Special Economic Zone 4.12
Quant Multi Asset Fund Adani Ports and Special Economic Zone 5.27
Quant Quantamental Fund Adani Ports and Special Economic Zone 4.70
Quant Tax Plan Adani Ports and Special Economic Zone 6.11
Quant Tax Plan Ambuja Cements 7.72
Quant Value Fund Adani Ports and Special Economic Zone 2.28

Source: ACE MF, Data as on December 2022

Adani Group stocks have been in a freefall since the US-based short seller Hindenburg Research released a report alleging wrongdoings. Since then even some banks like Credit Suisse,Citigroup and Standard Chartered stopped taking its overseas bonds as collateral. Political pressure is also building up as the opposition has been stalling the parliament over the issue. The group stocks continue to be under pressure as it is still not clear how the scenario is going to unfold.

Quant schemes have lost more than their peers and benchmarks since the controversy started. The report was released on January 24. Since then most Quant Mutual Fund schemes have been falling (See Table: How much Quant schemes lost?)

How much Quant Mutual Fund schemes lost?
Scheme Name
Loss between January 25 to February 1 2023
Quant Infrastructure Fund -6.28
Quant Tax Plan -5.19
Quant Active Fund -5.14
Quant Large Cap Fund -4.30
Quant Absolute Fund -4.11
Quant Flexi Cap Fund -3.92
Quant Focused Fund -3.67
Quant Mid Cap Fund -3.33
Quant Value Fund -3.21
Quant Large & Mid Cap Fund -3.01
Quant Quantamental Fund -2.91
Quant Multi Asset Fund -2.87
Quant ESG Equity Fund -2.50

Source:ACE MF, Returns as on February 3 2023“Yes, (Quant schemes are falling ) because they had investments in two stocks: Adani Ports and Ambuja Cement. Ambuja Cements has not fallen that much but Adani Ports and SEZ has fallen more than 50%. So automatically that will have an impact on these schemes,” says Chokkalingam Palaniappan, founder, Prakala Wealth Management.He says looking at the price fluctuation, it seems most institutional investors might have exited the socks as retail investors alone selling cannot bring down the price like this. So, it is possible that Quant also might have exited these stocks. Quant Mutual Fund had reduced its exposure a few months ago.

What should you do if you have investments in Quant Mutual Fund schemes? “Investors need not panic or need not exit now. Investors should wait and watch how things come up and continue with the SIP. It will recover automatically,” says Chokkalingam. He says investors can make a decision after six months. “A 5% hit in a normal fund is possible. In equity funds this hit is possible but the good thing is they can recover if the investor continues to hold the investment.”

Mutual fund advisors say Quant schemes are meant for aggressive investors who can take risk and have a long investment horizon. Chokkalingam says when you are making aggressive decisions you should stick to it rather than quit. “If you went for higher returns, then higher returns come with higher risk. So continue with that investment and they will recoup. It is not a wise decision to exit now from these schemes.,” he says.



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