Quant Mutual Fund to exit Adani Group shares, say sources

“The spike in volatility in the first few days of February changed the view of the house on Adani shares. We have reduced our risk to zero now,” the person said.

“We closely monitor the liquidity and risk appetite data. Any change in them leads to dynamic rebalancing of the portfolio based on the risk-on/risk-off environment at the sector as well as stock level. Hence, we have already Have dynamically rebalanced its portfolio, the asset management company said on Twitter on February 2 in response to a user query on Quant MF exposure to Adani shares.

Quant MF CEO Sandeep Tandon had also hinted at this move by Quant in a TV interview. “We manage money dynamically. When the data changes, our approach changes. We have taken the steps which had to be taken at the right time. From our NAV you can conclude what steps we have taken, he told CNBC Awaaz.

Unlike traditional fund houses, which have a buy-and-hold approach to investing, quant mutual funds frequently churn their stocks, rapidly entering and exiting their portfolio companies based on quantitative triggers. You can read more about the Quant MF style of investing Here,

On January 28, Mint had reported Quant MF’s exposure to Adani Group shares stood at 5-8% of assets of various schemes as of December. It was reduced marginally to 2-6% in January. However, in February, the fund house exited completely.

The steep rise in Adani’s share prices had driven the returns of Quant Schemes in 2022. For example, the returns of Quant Absolute Fund were projected to grow by 44.48% and 13.32% in 2021 and 2022 respectively. It 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 had gained 35.6% and 9.68% in those years.

An investigative report by US-based short-seller Hindenburg Research on January 24 has brought down Adani Group shares, wiping off billions in market value. Adani Ports and SEZ is down about 40 per cent since January 24.

Quant mutual fund schemes have also suffered losses.

For example, the Quant Infrastructure Fund is down 8.9% since January 24. Similarly, the Quant tax plan is down 7.7%. Exits can result in losses for investors in Quant Mutual Fund schemes. However, unit holders of Quant Mutual Fund may also suffer losses if Adani shares rally. To be sure, the fund house’s high-frequency strategy means a swift re-entry into Adani shares, if the recovery stalls, cannot be ruled out.