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Exposure of mutual fund (MF) equity schemes to consumer good companies has increased to a nine-month high amid the market entering a consolidation phase. As the end of last month, a little over 5% of the total equity assets under management (AUM) were in shares of fast moving consumer good (FMCG) companies. These stocks are perceived to be safe-haven beats as they are low-beta in nature, meaning the fall or gain less than the broader market.
Fund managers have been pruning the exposure to FMCG stocks in the last one year as the market had entered a strong bull territory. In 2014, the exposure had dropped to 4.6% from 8% in the previous year.
In absolute term, MFs hold nearly Rs 18,300 crore worth of FMCG stocks, up from Rs 11,800 crore in June of last year.
The total equity AUM for the Rs 12 lakh crore-mutual fund industry stood at Rs 3.65 lakh crore at the end of last month.
The market has traded volatile in the last three months. The index after hitting an all-time high of 29,681.77 on January 29 has come off nearly 9%.
Fund managers say even though FMCG stocks trade at expensive valuations compared to the broader market, they offer steady growth and less volatility in earnings. Meanwhile, other sectors are expected to be under pressure due to subdued earnings expectation for at least another two quarters.
