SEBI's Equity Scheme Flexibility May Enhance Downside Protection for Investors: Quant Mutual Fund

SEBI's Regulatory Move Boosts Risk Management and Investor Protection

The recent circular by the Securities and Exchange Board of India (SEBI) on Categorization and Rationalization of Mutual Fund Schemes has been seen as a positive regulatory development by Quant Mutual Fund. According to Sandeep Tandon, CIO of Quant Mutual Fund, the new rules will allow fund managers to deploy the residual portion of equity portfolios in money market and other liquid instruments, Gold and Silver instruments, and InvITs within prescribed limits.

This added flexibility is expected to enhance downside protection and enable asset-class level hedging to improve risk-adjusted returns for investors. For instance, small-cap schemes can now hold Gold or Silver ETFs within limits as a hedge during periods of heightened geopolitical volatility.

Quant Mutual Fund has fully aligned its systems to implement these changes and intends to tactically deploy multi-dimensional strategies across schemes with immediate effect, within the regulatory framework.

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Global Risk-Off Intensifies

The recent volatility in the market, particularly in late-February following the US Supreme Court's decision to rescind global tariffs, has reinforced Quant Mutual Fund's earlier view that developed market (DM) equities appear increasingly riskier than emerging markets (EM), with complacency indicators near record highs in the US, Taiwan, and South Korea.

India Remains a Structural Outlier

Despite the global risk-off, Sandeep Tandon reiterated the fund house's bullish stance on India, calling Indian equities the "world's premier structural growth story". He pointed to India's nominal GDP growth, which is more than double that of China, and the government's launch of Asset Monetization Plan 2.0, targeting Rs 16.72 trillion over five years.

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India's relative price-to-earnings multiples have realigned with historical averages after the recent correction, setting the stage for the next leg of the bull run supported by an improving earnings revision cycle. The support from the RBI is ensuring that the USD-INR pair is peaking rather than breaking out.

Portfolio Strategy

On portfolio positioning, Sandeep Tandon said that Quant Mutual Fund has recently increased cash levels to rebuild equity exposure at lower levels. Portfolios remain tilted towards large caps, with select additions in mid and small caps across equity and hybrid schemes. The fund house continues to remain constructive on large infrastructure, select NBFCs, insurance, asset management companies, banks, hotels, pharmaceuticals, telecom, and select consumption themes, positioning for what it sees as the next phase of India's structural growth story.