Quant Mutual Fund increases cash levels to rebuild equity exposure at lower levels

Synopsis Quant Mutual Fund has increased cash levels to rebuild equity exposure at more attractive valuations, maintaining a large-cap bias. Amid heightened global volatility, the fund house says Sebi’s new scheme rules enhance flexibility, strengthen downside protection, and support tactical multi-asset strategies across its portfolios. Quant Mutual Fund has increased its cash levels with a view to rebuilding equity exposure at lower levels, and the portfolio remains tilted towards large caps, according to the monthly release by the fund house. It added that liquidity remains healthy, with increased exposure to select mid- and smallcap stocks across equity and hybrid schemes. The fund house remains constructive on large infrastructure, select NBFCs, insurance, AMCs, banks, hotels, pharmaceuticals, telecom, and key consumption themes. Also Read | Gold vs silver ETF: Which metal should investors prefer amid US-Israel strike on Iran? Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » With Sebi recently issuing the categorisation and rationalisation of Mutual Fund Schemes, the fund house views this as a positive regulatory development that provides greater flexibility in deploying the residual portion of equity scheme portfolios. “Money managers can now invest this residual portion not only in equities but also in money market and other liquid instruments, Gold and Silver instruments (as permitted by SEBI), and InvITs, within prescribed limits,” said the release. Live Events This added flexibility enhances downside protection and enables asset-class-level hedging to improve risk-adjusted returns for investors—for instance, allowing small-cap schemes to hold Gold or Silver ETFs within prescribed limits as a hedge, especially during periods of heightened geopolitical volatility. And as a fund house, Quant Mutual Fund is fully aligned to implement these changes, and also intends to tactically deploy multi-dimensional strategies across our schemes with immediate effect, within the regulatory framework, the monthly release further said. As Iran is attacked by Israel and the US, it has triggered a global Risk-off market rout, and investors are fleeing to safe havens and to liquidity, driving Gold prices and the DXY index higher. Due to this, volatility ascended, with India’s VIX rising to 17.0 levels, while the Iranian Rial collapsed 30%. AI scare The mid-February also saw an AI scare trade, dubbed “SaaSpocalypse,” as investors rotated out of tech and global IT services stocks suffered their worst monthly performance in decades and investors aggressively reduced positions due to fears that rapid advancements in Generative AI would render traditional outsourcing models obsolete, which led to a 20% monthly decline in the Nifty IT index. Also Read | How should mutual fund investors think about their portfolios amid the US-Israel conflict with Iran? Post this, the fund house believes that we are in the midst of a global risk appetite shrinkage cycle, evidenced by PE contraction in new-age technology and selling pressure on corporate earnings regardless of performance. The fund house remains positive that the next phase of India’s bull run will be supported by an improving earnings revision cycle, following structural reforms. Trump tariff February saw the long-awaited trade agreement between India and the US to reduce tariffs on Indian imports to 18%, the fund house believes that global capital is underestimating this India-US trade catalyst, which goes beyond adding to volumes and quality of trade. Markets are ignoring this significant positive development in the short-term, but will be forced to reward it in the medium and long term as trade with the US provides phenomenal benefits to India. 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