Founder and CIO of Quant Mutual Fund Sandeep Tandon said, "Even in the crisis in which people lost their pants, we made money."
Quant Mutual Fund’s founder and Chief Investment Officer (CIO) Sandeep Tandon did not give any details about the market regulator’s investigation into allegations of front running, but assured investors and other stakeholders about the fund’s liquidity position and ability to manage risk.
In the January-March quarter of 2023, the fund was the worst performing mutual fund, he said; the fund was seeing 6-9 percent of underperformance.
In the September quarter, when it was a risk-on environment, the fund house took an aggressive call and “played that cycle very well”.
On sectoral outlook, Tandon said that the fund house remains constructive on Public Sector Undertaking (PSUs), commodities and pharma.
Founder and CIO of Quant Mutual Fund Sandeep Tandon said, "Even in the crisis in which people lost their pants, we made money."
Quant Mutual Fund’s founder and Chief Investment Officer (CIO) Sandeep Tandon did not give any details about the market regulator’s investigation into allegations of front running, but assured investors and other stakeholders about the fund’s liquidity position and ability to manage risk. Tandon was addressing investors on June 26, through a Zoom call, which crossed its participant limit within minutes.
During the call, Tandon referred to the Securities and Exchange Board of India (Sebi) inquiry but did not delve into the details. However, he did suggest that media coverage had caused him pain, particularly references to his late father. Tandon’s father passed away four years ago.
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Also read: MC Exclusive: Sebi suspects front-running in Sandeep Tandon-owned Quant Mutual Fund; conducts search and seizure operations
He said that there may be a lot of “noise” around what the fund house is doing, driven by what he referred to as “ jealousies or other factors”, but the fund house will remain steadfast in its reliance on data and analytics.
In the call, Tandon said that the fund has pivoted from midcaps to large caps, and from illiquid to liquid shares over the past few months.
As per his presentation , as of June 25, the fund’s liquid assets which include large cap stocks, T bills, G secs and gold and silver totalled approximately Rs 47,640 crore.
He said that there have been no "alarming redemptions". In the last three days, their net equity outflow has been only Rs 1,398 crore or 1.5 percent of Assets Under Management (AUM). Quant has a total AUM is of about Rs 90,000 crore, across 21 mutual fund schemes.
The presentation indicated that gross inflows remained normal while gross outflows has increased.
Style of money management
Tandon said that the fund is data and analytics driven. To emphasise this point, Tandon repeated an oft-quoted maxim of the industry saying, “Objectivity is religion and data is god”.
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Later in the call, to illustrate how this approach—of trusting data--has benefited the fund house, he quoted their predictions of the index levels. He pointed out that they had seen Nifty at over 24,000 in 2024 and that the target is near. The same is the case with Bank Nifty, where they had projected 54,000+, which could be round the corner.
Tandon then appealed to investors to not get carried away by what he described as “ narratives and subjective opinions”.
He then spoke about how the fund’s “dynamic style of money management” plays out.
In the January-March quarter of 2023, the fund was the worst performing mutual fund, he said; the fund was seeing 6-9 percent of underperformance. In the second quarter, the fund was still in the fourth quartile. In the September quarter, when it was a risk-on environment, the fund house took an aggressive call and “played that cycle very well”.
By January 2024, the fund had taken a lead position in most categories, he said and credited this transformation to their dynamic style of money management.
He said that their fund has been “built for mistakes”.
Tandon added, "Mistakes will happen, the strength is that we don't repeat those mistakes."
Risk managers
As a fund house, they don’t see themselves as money managers in isolation, he said.
According to Tandon, they are risk managers.
“As a house, we manage risk very well,” he said and then spoke about his earlier avatar managing a proprietary desk.
Tandon said that he ran the proprietary desk for 10 years. "It was a very large prop desk in the country. We used to manage Rs 5,000 crore to Rs 7,000 crore turnover on daily basis, we were top five (funds) by volume on the exchanges... And I'm happy to share 10 years I ran that book under my leadership. Not one year we had delivered negative. Not even one quarter was negative."
During the Lehman crisis, when Quant was in its first year, the fund house generated “extraordinary” returns even generating Rs 18 crore rupees in 18 days, said Tandon.
“Even in the crisis in which people lost their pants, we made money,” he said.
On the churn in their portfolio
He said the AMC remained constructive on India and that it wasn’t enough to just target the Nifty. He said that the fund house is “very good” at sector rotation and stock rotation.
Tandon noted said that people may call it churn but, he said, the fund house sees this as risk-management.
Market experts have commented on Quant’s high churn rate. As per ACE MF data, the churn rate of Quant’s equity-oriented funds has been around 300 percent, which in MF parlance is seen to be high. The ideal churn ratio is 5-7 percent but 50-60 percent is also considered acceptable.
On sectoral outlook, Tandon said that the fund house remains constructive on Public Sector Undertaking (PSUs), commodities and pharma.
Also read: Quant MF cherry-picked these smallcap stocks lately. Do you own any?
India’s moment
In the call, Tandon said that this was an India moment and asked investors not to exit in fear.
He said, "It is India’s movement, irrespective of the leadership (who is in the government). "
He added, “Our conviction comes from data analytics. With the help of data analytics, what we have understood is that even if you are not comfortable... don't exit the market for the next few years. "
