Quant Mutual Fund moves out of HDFC Bank months after betting big

Quant Mutual Fund (MF) schemes have likely sold all of their holdings in HDFC Bank, months after investing big in the country’s largest private lender. 
 

The stock, which was among the top two holdings of most of its schemes at the end of June, now doesn’t even feature in any of the top 10 schemes.

Quant MF has managed to dominate the equity scheme performance charts in recent years, with its high-conviction bets working out well. 

In 2022, its schemes rode the momentum in Adani stocks. 

Following the Hindenburg attack on Adani shares in early 2023, the fund house shifted the allocation towards Reliance Industries and Jio Financial. 

The investment proved to be a key driver for its schemes' performance in the past year.

However, the fund house's performance has struggled in recent months. The slump in performance coincides with the regulator initiating an investigation over front-running possibilities in the fund house.

Being the third biggest company by market capitalisation with high free float, HDFC Bank has the largest weight in largecap, banking and financial services indices. Most diversified active equity schemes have a significant exposure to the stock. 

Quant MF is among the few fund houses, which has had nil to low allocation to HDFC Bank in recent years, except for the brief period of May to July.

Despite being attractive from a valuation perspective, HDFC Bank has failed to deliver returns to shareholders for some time now.

Its long spell of underperformance was expected to end in July on expectations that the increase in its weight in MSCI index will lead to strong buying by global passive funds.

However, the move by MSCI to increase its weight in a phased manner proved to be a dampener.