Investment recommendation platform Prime Investor has advised investors to exit Quant Mutual Funds in light of front-running allegations.

What Happened: Prime Investor in their note said that repercussions of these allegations on Quant AMC are yet to be ascertained. However, the company could potentially experience redemption pressure and a possible drop in the price of portfolio stocks allegedly used for front-running.

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The allegations against the fund house came to light Sunday, indicating that insiders at the company might have gained from front-running trades. The market has seen instances of front-running earlier as well. In 2020, SEBI imposed fines on several entities for front-running trades executed by HDFC AMC. Axis Mutual Fund also faced a similar situation in 2022, which led to significant outflows and a drop in stock prices of companies that were in question.

The research platform cautioned that this could particularly impact Quant, which is relatively smaller than the above-mentioned fund houses and has a significant holding of mid and small-cap stocks.

The research firm is advising investors to exit all equity and hybrid funds of Quant AMC due to the potential damage to investor sentiment and the possible impact on redemptions.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.