In times of uncertainty, ‘cash is king’. This is reflected also in mutual funds cash holding and their sectoral exposures in October over December 2007. As the situation turns from bad to grim in the financial sector, mutual funds are holding more and more of cash against their exposure in any sector.
Total cash component in the equity schemes stands at more than Rs 9,000 crore, which is more than 16 per cent of the total equity asset under management (AUM) as on October 31. This is against Rs 6,000 crore of cash as on December 2007, which was 6.3 per cent of the total equity exposure.
Cash as a sector has the highest weightage in diversified schemes and ranks top with AUM of Rs 3,523 crore. It stood at far eight with an AUM of 2,172 crore in December 2007.
Among the companies, mutual funds still have the maximum exposure in Reliance Industries as far as the portfolio of the diversified equity schemes are concerned.
ICICI Bank is a major loser as it fell from being the second most favourite stock since December 2007 till September 2008 to eighth position in October.
Even as the scrip lost 25 per cent of its value in October, it lost 43 per cent in terms of its holdings with the diversified equity schemes.
“It is because of the fall in valuation of the scrip along with fund houses reducing their stake in the company,” said Prasunjit Mukherjee, chief executive officer, Plexus Management Services.
There has been a big change in the weightages of sectors too.
Engineering & Capital Goods, which as a segment occupied second spot in terms of investment after banks in the diversified schemes in December 2007 with a total AUM of Rs 3,265. It now occupies seventh spot with Rs 1,197 crore. Banking as a sector occupies the second spot in holdings of diversified equity schemes.