Front running? Axis Mutual Fund removes 2 managers; makes changes in 7 schemes

Axis Mutual Fund has announced changes in fund managers of its seven schemes, with effect from May 4. Viresh Joshi, who was the head trader for Axis Mutual Fund, and Deepak Agrawal, who was an equity research analyst and fund manager for Axis Consumption ETF, will no longer be part of these mutual fund schemes. Both of them have been removed following the allegations of ‘front running’, a news daily reported. Axis Mutual Fund has not issued an official statement on this so far.

Front running or forward trading is a prohibited practice, in which a broker exploits market-moving knowledge that's not available in the public domain, which is illegal.

Viresh Joshi was earlier heading Axis Arbitrage Fund, Axis Banking ETF, Axis Consumption ETF, Axis Nifty ETF, and Axis Technology ETF. In Axis Arbitrage Fund, Ashish Naik will replace Joshi, while Naik will alone handle Axis Nifty ETF. Axis Technology ETF, which was jointly headed by Joshi and Jinesh Gopani, will be handled by the latter only.

Deepak Agrawal, who was earlier part of Axis Value Fund, Axis Quant Fund, and Axis Consumption ETF, will no longer be part of these schemes. Instead, these schemes will be handled by Jinesh Gopani (Axis Value Fund) and Ashish Naik.

Axis Mutual Fund has not revealed the exact reason behind the reshuffle, though it’s being reported that the action came following the market regulator SEBI (Securities and Exchange Board of India) launched a probe into the matter.

The market is also abuzz with rumours of alleged wrongdoings at “a large mutual fund”, and that the probe is being conducted by the market regulator. In light of these wrongdoings, this large fund has reportedly asked some of its officials to either take leave or quit the company.

The fund came into action after complaints by some brokers against one of the dealer/fund manager. The dealer allegedly received kickbacks from brokers for executing trades way higher than the market. The dealer is also accused of a flashy lifestyle, including owning sports luxury cars and several real-estate properties, though these claims are yet to verified. Another fund manager is accused of overlooking wrongdoings.

So, as investor in mutual funds, should you be worried? Market experts think there's no reason for panic among investors as all these funds are managed by more than one manager. They also call for the fund house to come up with an official statement.

Axis Mutual Fund, which launched its first scheme in October 2009, runs over 53 mutual fund schemes involving around 98 lakh active investor accounts. It has a presence in over 100 cities across India.