SEBI or the Securities and Exchange Board of India has conducted search and seizure operations in the Quant Mutual Fund offices for the front-running allegations. Quant MF is one of the emerging MFs in India Many people are investing through it because it has given some good returns from the past 2-3 years compared to other MFs. That means the average return of Quant is better than any other MF at least till now.
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So these allegations if proven correct will have a huge impact on the market. Though till now nothing proven so we are good, the Quant MF has also clarified that they have received inquiries from SEBI but did not add anything more to it. Now let's understand what is Front Running.
Front running means when the AMC employees buy shares or if they leak information before the AMC or Mutual Fund house buys it so that they will gain profit. In the Indian context, it is illegal and unethical and SEBI takes it very seriously. So there were allegations that Quant MF is doing front running and thus because of that SEBI has searched the premises of it to find the truth.
Now if the report comes out to be true then it might hurt the market this is because people will try to withdraw from the Quant MF and thus it will increase the sell pressure on the market and eventually the market might fall. But it is too soon to say anything as nothing has been proved till now.
In my case I have not invested in Quant Mutual fund scheme. Since I am totally investing as a passive fund now, so none of my passive fund is from Quant AMC. Even if I would have invested, I will not be panicked and wait till the the dust settles. Until then continue investing.