Quant Mutual Fund exits Adani Group stocks, say sources
2 min read . Updated: 04 Feb 2023, 09:13 AM IST
Premium- Quant’s equity schemes had come under pressure due to its exposure to Adani group stocks, which corrected singnificantly after the short-seller Hindenburg’s report
Mumbai: Quant Mutual Fund has exited its position in Adani Group stocks, a person with direct knowledge of the matter, who declined to be named, told Mint on Friday.
“The spike in volatility in the first few days of February altered the house view on Adani stocks. We have now reduced our exposure to zero," the person said.
"We closely monitor liquidity and risk appetite data. Any changes in those leads to dynamic rebalancing of the portfolio depending on the risk-on/risk-off environment at sector as well as at stock level. So, we have already dynamically rebalanced our portfolio," the asset management company had said in response to a user question on Quant MF exposure to Adani stocks on 2 February on Twitter.
Quant MF CEO Sandeep Tandon had also hinted at Quant’s move in a TV interview. “We manage money dynamically. When data changes, our view changes. What steps had to be taken at the right time, we have taken it. From our NAV you can conclude what steps we have taken," he had told CNBC Awaaz.
Unlike traditional fund houses which have a buy-and-hold approach towards investing, Quant Mutual Fund frequently churns its stocks, rapidly entering and exiting its portfolio companies based on quantitative triggers. You can read more about the Quant MF style of investing here.
On 28 January, Mint had reported on Quant MF's exposure to Adani group stocks which stood at 5-8% of assets of various schemes as of December. This was pared marginally to 2-6% in January. However, in February, the fund house made a complete exit.
A meteoric rise in Adani share prices had driven returns of Quant schemes in 2022. For instance, returns of Quant Absolute Fund were up 44.48% and 13.32% in 2021 and 2022, respectively. This beat the S&P BSE 100 index by a wide margin, which gave 26.53% and 6.03% in those years.
Similarly Quant Focused Fund was up 35.6% and 9.68% in those years.
An investigative report by US-based short-seller Hindenburg Research on 24 January has triggered a meltdown in Adani group stocks, wiping off billions in market value. Adani Ports and SEZ is down about 40% since 24 January.
As a result, Quant Mutual Fund schemes have also suffered.
For instance, Quant Infrastructure Fund is down 8.9% since 24 January. Similarly, Quant Tax Plan is down 7.7%. The exit may contain losses for investors in Quant Mutual Fund schemes. However, if Adani shares rebound Quant Mutual Fund unit holders may also lose out. To be sure, the high frequency strategy of the fund house means that rapid re-entry into Adani stocks, in case a recovery takes hold, cannot be ruled out.
