Financial Daily from THE HINDU group of publications
Sunday, Apr 20, 2003
Financial Daily from THE HINDU group of publications Sunday, Apr 20, 2003 |
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Investment World
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Mutual Funds Markets - Mutual Funds Columns - Comment Daring to experiment Aarati Krishnan
IT MAY have taken a long time in coming, but equity fund management finally appears to be coming of age in India. A close look at some of the major equity fund portfolios shows that fund managers today are far more willing to set aside tried-and-tested stocks and sectors, and experiment with new ideas for their portfolios. This is evident from the presence of such stocks as EID Parry or Monsanto Chemicals in Franklin Prima and Blue Star, and Ucal Fuel Systems in the top ten holdings of HDFC Tax Plan 2000. What is more, quite a few funds today have allocations to sectors such as fertilisers, commodity chemicals, steel and metals. And at least a couple of diversified funds have completely weeded out FMCG stocks despite their large representation in the Sensex and the Nifty. Such moves would have been viewed as sheer foolhardiness just a couple of years back. Those were times — especially 1997-2000 — when equity fund managers hopped on to one major investment theme in the market and rode it for all it was worth. In 1997-98, equity fund portfolios had piled on FMCG, pharma and IT stocks; in 1999 they switched en masse to IT stocks. Most fund managers would stay well away from anything with a `cyclical' or `commodity' tag. This trend also had a couple of side-effects. It made all equity funds look almost alike, with the same kind of stocks forming their portfolios. It also sharply narrowed the universe of stocks that equity funds tracked and picked up for their portfolios. The abrupt collapse of tech stocks and the bearish phase of the past three years appear to have forced fund managers to revert to their stock selection skills, in their effort to beat the indices. Yes, many equity funds today have overweight positions in banking and oil stocks. But these exposures have been taken in moderation.
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