In a call with investors, Sandeep Tandon's Quant Mutual Fund reported net equity outflows of Rs 1,398 crore since SEBI launched its front-running investigation into India's fastest-growing fund firm.

According to a report earlier this week, the Securities and Exchange Board of India, the market regulator, searched and seized Quant Mutual Fund due to possible front-running.

With 21 mutual fund schemes, Quant's total assets under management (AUM) is expected to be over Rs 90,000 crore. With Rs 20,000 crore in assets under management, it manages the third-largest small-cap fund in the nation.

This increased worries about the fund's liquidity profile and its holdings of midcap and smallcap companies, in case it experiences redemptions that exceed the standard allowances.

Sandeep Tandon, the founder and CIO of Quant Mutual Fund, tried to allay investor fears during the call by stating that the fund's portfolio is reasonably liquid. Over the past six months, he noted, the fund has switched from an illiquid to a liquid strategy and from midcaps to large caps.

In the last three days, Tandon said, there haven't been any "alarming redemptions". According to Tandon's presentation, gross outflows have increased even while gross inflows are still typical.