Quant Mutual Fund: A look at the MF under Sebi scanner for front-running, founder Sandeep Tandon’s philosophy, success…

Quant Mutual Fund, which is being investigated by the Securities and Exchange Board of India (Sebi) on suspicion of front-running, is the fastest-growing mutual fund in the country with over ₹90,000 crore of assets under management (AUM).

Founded by Sandeep Tandon, Quant secured its mutual fund license from Sebi in 2017.

Issuing a clarification, the company has said it is “fully committed to co-operate with the regulator” and "will provide all necessary support and continue to furnish data to SEBI on a regular and as-needed basis".

Front-running is an illegal practice where fund managers, dealers, or brokers, who are aware of upcoming large trades, place their own orders beforehand to profit from the anticipated price movement when the large trade is executed.

Mint gives a lowdown on all you need to know about Quant Mutual Fund.

About Quant

As per the company's website, the financial services business emerged "in the midst" of the 2008 global financial crisis. It states ‘Being Relevant’ and ‘Predictive Analytics’ as the "guiding mantras" for the business.

In a letter, founder Sandeep Tandon writes that the group's quant Global Research (qGR) has created a suite of analytical indicators and framework that has allowed it to build "a successful predicting track record" that has benefitted institutional investors and wealth management clients.

"To grow wealth, it is imperative to participate in the periodic bubbles but only equipped with a predictive framework and behavioral strength that allows the right exit. This is also derived from the driving theme of my life – ‘timing is everything’, or at least the most important determinant of success... The benefits of diversification across asset classes will be of utmost importance, more than at any time during the last couple of decades," Tandon stated.

How Well is Quant MF performing?

It has AUM worth ₹90,000 crore or approximately $11 billion, as per a Reuters report. It added that Quant MF ranks 18th in terms of AUM among 44 asset managers in India. Over the past 12 months, the mutual fund, which is an active investor in small- and mid-cap stocks, has seen the broader market indices soar 69.48% and 59.28%, respectively.

As per Mint's data, the MF's Quant Active Fund Growth, managed by Sanjeev Sharma, Vasav Sahgal, and Ankit Pande, has delivered a CAGR of 31.36% over the past five years and 54.91% in the last year. It has an AUM of ₹10,204.01 crore.

What is Quant's investment philosophy?

The company's website states that "being relevant is the guiding philosophy" for Quant money managers, adding that the principles of being active, absolute and unconstrained generates enduring value for our clients.

The fund believes that in a dynamic world, "passive investment strategies can no longer outperform" and need "active strategies which can invest in sync with the dynamics at play".

It added that outperformace requires "looking at the world relatively" with investment strategies that have an "absolute objective irrespective of market conditions".

Further, it said that its processes and systems are embedded with the conviction that success in investing "is through cultivation of a multitude of opinions and perspectives" or an "unconstrained perspective" to seek every possible opportunity in any set of circumstances.

Behind Quant's ‘consistent success’

The fund attributed its "consistent success" to "studying markets along four dimensions as opposed to one school of thought". These four dimension were listed as: Valuation, Liquidity, Risk Appetite, and Time.

• Valuation: Knowing the difference between price and value.
• Liquidity: Understanding the flow of money across asset classes.
• Risk Appetite: Perceiving what drives market participants to certain actions and reactions.
• Time: Being aware of the cycles that govern how the other three dimensions interact.

Quant MF's offerings

As a mutual fund, its offerings include quant Active Fund, quant Absolute Fund, quant Focused Fund, quant Large & Midcap Fund, quant Midcap Fund, quant Smallcap Fund, quant Consumption Fund, quant Infrastructure Fund, quant Tax Plan, quant Liquid Fund, quant Money Market Fund, quant Dynamic Bond Fund and quant Multi Asset Fund.