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Funds continue to woo software stocks

May 18, 2000

The mutual fund-bias towards software stocks persists despite the hammering of technology-media-telecom (TMT) stocks over the past few weeks. A study conducted by reveals that some open-ended growth funds continue to take a disconcertingly higher exposure to software stocks which could spell even more trouble for them in the coming days. In January 2000, in an interview to, Mr Ajay Srinivasan (Managing Director, Prudential-ICICI Mutual Fund) had remarked that investors were willing to take some risk for higher growth and that is the reason why they had taken to TMT stocks as opposed to the more staid, consumer products and refinery stocks. Mutual funds justified their over-exposure to TMT stocks giving the same rationale as explained by Mr Ajay Srinivasan.

But with the huge correction and volatility in TMT stocks, one would think funds would downsize their exposure to these stocks. However, the table below shows otherwise. Funds continue to show huge exposure to software stocks in their portfolios. Our study shows that these funds had over 1/3rd of their assets in software stocks, which is a matter of some concern to investors. As TMT stocks continue to be tanked heavily, the next few days will see more decline in the net asset values (NAVs) of these funds. (Visitors can use the interactive ‘’Portfolio queries’’ module in the Mutual Funds section to run more studies of a similar nature).

Open-ended schemes Date of holding % Holding NAV (Rs)
Tata Tax Savings Fund 30 Apr,2000 73.0 15.2
Tata Life Sc & Tech. Fund (I) 30 Apr,2000 67.0 12.5
Birla Advantage Fund 31 Mar,2000 65.0 41.8
Birla Balance (Growth) 31 Mar,2000 65.0 11.6
JM Equity Fund (Gr) 28 Apr,2000 54.0 10.8
Tata Young Citizens Fund 30 Apr,2000 47.0 10.7
Magnum Multiplier Plus 1993 1 Apr,2000 43.8 18.8
DSP ML Equity Fund 31 Mar,2000 43.1 18.6
Tata Pure Equity Fund 30 Apr,2000 41.0 12.8
JM Balanced Fund (Gr) 28 Apr,2000 41.0 16.0
Magnum Taxgain 1 April,2000 40.4 23.4
Unit Scheme - 1995 (Gr) 3 Jan,2000 37.5 193.1
Zurich India Top 200 31 Mar,2000 36.6 15.6
K 30 2 May,2000 36.4 19.1
Zurich India Equity (Gr) 31 Mar,2000 36.0 20.1
Sun F & C Value Fund (Gr) 30 Apr,2000 36.0 21.3
Kothari Pioneer Prima Plus (Gr) 30 Apr,2000 35.9 23.3
Pru ICICI Tax Plan (Gr) 31 Mar,2000 34.9 12.9
Pru ICICI Growth Plan (Gr) 31 Mar,2000 34.0 21.7
Magnum Balanced Fund 1 Apr,2000 33.8 14.8

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