Shares of sectors which have long been avoided by mutual fund managers have started showing a steady rise in the latter’s investment portfolios.
Most fund managers had maintained an underweight call on cement, construction and capital goods (CCC). However, with the situation improving now and a rise in expectations of reforms as well as their execution, investments are making their way into such avenues.
The CCC sectors have started attracting the attention of fund managers. For instance, exposure in shares of capital goods has seen a rise of 16 basis points. Cement and construction witnessed fund managers scaling up their investments by 30 basis points over the last two months.
Navneet Munot, chief investment officer at SBI Mutual Fund, says, “The capital goods space is incrementally looking better. With possible improvement on the execution side, there are chances of improvement of the sector’s fortune.”
The same goes for cement shares, which have emerged as outliers compared with the returns which the broader markets showed this year. Rather, in the cement space selective pickings had begun since the start of this year.
“Several of our cement picks have helped in the volatile market situation and helped us match or beat the benchmarks,” explains the equity head of another top fund house.
According to Mahesh Patil, co-chief investment officer at Birla Sun Life Mutual Fund, “On cement, we have been positive. We liked that space and got benefits out of that. The good thing about cement is that even during the bad times they did very well because of pricing discipline. Things are now bottoming out for the sector and the demand story will only improve from here.”
Meanwhile, the proportion of equity assets invested in bank stocks by mutual fund managers is back to their highs. Fund managers are buying into these on rising expectation of rate cuts next year. After dipping to below 18 per cent in August, in just two months exposure in banking shares was up over 200 basis points in October.
On the other hand, before Barack Obama was re-elected US president, information technology (IT) stocks witnessed a drop of a little over one-fourth of a percentage point in investment managers' exposure. IT shares, which have been showing a declining trend among fund managers' portfolios for a few months now, could see only 8.72 per cent of the equity assets flowing into them.
Pharma, the sector being preferred more than the fast-moving consumer goods, saw a marginal decline in investment exposure from 8.02 per cent in September to 7.98 per cent, according to statistics available from the Securities and Exchange Board of India.
As on October 31, equity assets under management stood at Rs 1,96,124 crore.
