How Quantum AMC is adopting measures to protect investors amid SEBI's directive

Amid Securities and Exchange Board of India's (SEBI) recent directive on small and mid cap mutual fund schemes, mutual fund players are taking proactive steps to protect investors amid concerns of frothiness in se sectors.

SEBI's directive stresses upon importance of establishing an investor protection framework for those investing in small and mid cap schemes.

move follows stress tests conducted on such schemes with major assets under manment (AUM) to evaluate ir resilience in managing redemptions during market downturns.

regulatory initiative aims to prevent scenarios where early investors gain an advant over those who remain invested during market downturns and subsequent outflows, Chirag Mehta, CIO, Quantum AMC said.

Quantum Mutual Fund has ackwledged a steadfast approach amid heightened regulatory scrutiny. Despite ackwledging elevated valuations in small-cap , Mehta identifies pockets of opportunities through rigorous fundamental analysis, particularly focusing on price to earnings growth (PEG) metrics, Mehta ted.

Stressing upon importance of fundamental analysis, Quantum Mutual Fund assesses forward valuations to identify stocks with potential upside. fund house prioritises maintaining portfolio liquidity and implementing proactive measures to safeguard investor interests.

Key initiatives undertaken by Quantum Mutual Fund include:

Assessing fund capacity: fund evaluates fund capacity based on stock-level liquidity, ensuring that re is ample room before reaching capacity thresholds.
 
Maintaining liquidity: Quantum Mutual Fund maintains a minimum threshold liquidity requirement for portfolio stocks, ensuring that stocks can be entered or liquidated within a reasonable timeframe.
  
Portfolio positioning: To mitigate concentration risk, fund limits its holdings in investee companies, ensuring that single holding exceeds 5 per cent of market capitalisation of company.
  
Investment guardrails: fund caps its holding in investee companies at 4 per cent of portfolio on a cost-to-net asset value (cost-to-NAV) basis, reducing risk of large positions getting stuck in illiquid securities.
  
Portfolio rebalancing: Quantum Mutual Fund conducts regular portfolio rebalancing based on potential upside and relative valuation metrics, ensuring optimal portfolio performance.

se measures underline Quantum Mutual Fund's commitment to investor protection and reflect its proactive approach in navigating evolving market conditions.