Another scam jolts the mutual fund industry; what should investors do?

Axis Mutual Fund, the seventh-largest AMC in terms of assets under management (AUM), banned two fund managers for front running. Continue reading to learn more.

Another mutual fund swindle has occurred, as two fund managers from Axis Mutual Fund were banned on Friday. The actions were taken after they were accused of front running. Front running is when a person exploits his position/power to profit from expected price movement.

Axis Mutual Fund has been undertaking an independent inquiry since February 2022, according to a statement. Moreover, as per the notification sent by the mutual fund company on May 4, 2022, the two fund managers, Viresh Joshi and Deepak Agrawal, were terminated from managing their respective mutual funds and Exchange Traded Funds (ETFs).

As you can see, Ashish Naik, Devang Shah, Sachin Jain, Hitesh Das, and Jinesh Gopani now manage or co-manage all the above funds. Let us now examine the performance of these funds' new fund managers.

The accompanying table shows that the long-term average performance of these fund managers is fairly good. However, let us now consider the implications for investors.

The effect on investors

The actions taken against Axis Mutual Funds' two fund managers have uncovered another hoax in the mutual fund industry. Nonetheless, taking quick action assists the mutual fund company in remaining compliant and maintaining the trust of its unitholders.

Having said that, a change in fund management is unlikely to have an impact on the performance of the funds, given only three are mutual funds and the rest are ETFs. However, investors should examine their investment in these funds at least once every quarter to ensure that the fund's performance is consistent. Furthermore, if performance deteriorates in the next year when compared to the category, transferring to superior funds makes more sense. But for the time being, stay put.