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The mutual fund industry is betting big on software companies as its equity exposure to the sector climbed to a fresh all-time high of about Rs 33,000 crore at the end of October.
This also marks the fifth consecutive rise in mutual fund (MF) industry's exposure to software stocks.
Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.
The funds' investment in software stocks stood at Rs 32,838 crore as on October 31, 2014, accounting for 10.43 per cent of their total equity assets under management (AUM) of Rs 3.15 lakh crore, according to data available with the Securities and Exchange Board of India (Sebi).
At current levels, the MF industry has the highest exposure to software sector since August 2009. Data is not available for sector-wise exposure before August 2009, when the equity funds had deployed Rs 11,913 crore (6.71 per cent) in software shares.
The previous high was in September this year when investment in the sector rose to Rs 31,834 crore.
"Software services as a sector has not participated as much in the recent rally as some of the other sectors have," said Raghavendra Nath, Managing Director at Ladderup Wealth Management Pvt Ltd.
"Software services remain the backbone of Indian exports. With the growth in US becoming robust, the offtake of these services would likely increase in future. Therefore the sector is likely to remain in good health," he added.
This year has seen a consistent growth in investment in software stocks by equity fund managers with fund infusion growing from Rs 27,772 crore in January to Rs 32,838 crore in October.
Besides, mutual fund managers raised their exposure in bank stocks to a record high of nearly Rs 63,000 crore in October this year, which is the highest among all the sectors.
Among others, MFs have an exposure of Rs 21,845 crore in pharma space, followed by auto (Rs 20,282 crore) and finance (Rs 17,843 crore).
