Helping You Build Wealth With Honest Research
Since 1996. Try Now

MEMBER'S LOGINX

     
Invalid Username / Password
   
     
   
     
 
Invalid Captcha
   
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

India's Third Giant Leap
Discover the Best Category of Stocks to Ride this Mega
Opportunity at Our Upcoming Special Event




**Important: We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
**By submitting your email address, you also sign up for Profit Hunter, a daily newsletter from Equitymaster
covering exciting investing ideas and opportunities in India.


AD
  • Home
  • Views On News
  • Jun 11, 2023 - 5 Mutual Funds with Exposure to Artificial Intelligence (AI) Stocks

5 Mutual Funds with Exposure to Artificial Intelligence (AI) Stocks

Jun 11, 2023

5 Mutual Funds with Exposure to Artificial Intelligence (AI) Stocks

Artificial Intelligence (AI) has become the buzzword of the year.

The technology witnessed a renewed fervour in recent months after the world witnessed the potential of ChatGPT and Bard. These generative AI-based chatbots can mimic natural human conversation.

AI-based models such as ChatGPT can carry out mental processes like judgment, problem-solving, perception, and human communication in various languages. Think creating content, solving math problems, explaining complex topics, etc. It can also and translate.

Artificial Intelligence (AI) is slowly transforming our lives - the way we shop, manage our schedules, entertain ourselves, get customer support, and carry out many other tasks.

AI is also enhancing outcomes in key sectors such as healthcare, education, agriculture, automobile, and finance by automating routine tasks. It uses predictive analytics for making better decisions.

AI will become more sophisticated with time. With the betterment of machine learning and improving computing power, the possibilities of what AI can do is endless!

According to the National Association of Software and Service Companies (NASSCOM), given India's strong IT industry, AI-based utilities can leverage huge potential in the country. It expects AI to contribute an additional US$ 957 billion (bn) to India's economy by 2035.

As an investor, If you too wish to ride the booming technology wave, equity mutual funds can be your best bet.

In this article, we will look at some diversified equity mutual funds with higher exposure to Artificial Intelligence (AI) stocks.

#1: Parag Parikh Flexi Cap Fund

Launched in May 2023, Parag Parikh Flexi Cap Fund is a popular scheme in the Flexi Cap Fund category known for its value-oriented investment approach. The fund has the flexibility to invest across large-cap, mid-cap and small-cap stocks.

As of April 30, 2023, Parag Parikh Flexi Cap Fund allocated 56.6% of its assets in largecaps, about 4% in midcaps, 7.2% in smallcaps, 17.2% in overseas equities, and the balance in cash and debt.

Top AI Stock Holdings of Parag Parikh Flexi Cap Fund

table
Data as of 30 April 2023
(Source: ACE MF)

Parga Parikh Flexi Cap Fund holds exposure to foreign entities such as Microsoft Corp, Alphabet Inc, Amazon.com, and Meta Platforms. These have been at the forefront of various tech innovations, including AI. These stocks collectively account for 17.2% of its assets as of 30 April 2023.

#2: Axis Growth Opportunities Fund

Launched in October 2018, Axis Growth Opportunities Fund is categorised as a Large & Midcap Fund. The fund invests predominantly in large-cap and mid-cap stocks. It also plus diversifies the portfolio with offshore equities.

As of 30 April 2023, Axis Growth Opportunities Fund holds 38.8% of its assets in largecaps, 36% in midcaps, 4.1% in smallcaps, about 17.6% in overseas equities/ ADRs & GDRs, and the balance in cash and equivalents.

Top AI Stock Holdings of Axis Growth Opportunities Fund

table
Data as of 30 April 2023
(Source: ACE MF)

Axis Growth Opportunities Fund holds a mix of domestic and foreign AI stocks.

Tata Elxsi, a medium-sized IT firm is well-known for its design and engineering capabilities. It has the highest allocation followed by Microsoft Corp, Persistent Systems, and Alphabet Inc. These AI stocks collectively form 8.9% of the fund's net assets.

#3: Kotak Small Cap Fund

Kotak Small Cap Fund aims to invest in small-sized companies having the potential to grow in size and become future market leaders.

Launched as a Mid Cap Fund in February 2005, Kotak Small Cap Fund holds a smallcap biased portfolio along with significant exposure to midcaps.

As of 30 April 2023, Kotak Small Cap Fund has an allocation of about 67% in smallcaps, 22.6% in midcaps, 5.3% in largecaps, and the balance in cash.

Top AI Stock Holdings of Kotak Small Cap Fund

table
Data as of 30 April 2023
(Source: ACE MF)

Kotak Small Cap Fund has exposure of 7.4% to AI stocks.

Its highest exposure is in Cyient, a company that leverages AI and other cutting-edge technologies to enhance its service offerings and improve operational efficiency in sectors such as aerospace, defence, communications, and utilities. Cyient has been awarded and highly recognised for its analysis and AI capabilities.

It also holds allocation to Persistent Systems, a company known for its cutting-edge cloud-native application development, analytics and AI, cloud engineering, migrations, and managed services.

The fund also has exposure to Bosch, a leading supplier of technology and services in mobility solutions, industrial technology, consumer goods, and energy and building technology, along with small exposure to Happiest Minds Technologies.

#4: Motilal Oswal Midcap Fund

Launched in February 2014, Motilal Oswal Midcap Fund aims to invest in quality midcap companies having long-term competitive advantages and growth potential.

The fund's investment strategy is to create a concentrated, high-conviction portfolio with a low churn and a buy-and-hold approach to investing.

As of 30 April 2023, Motilal Oswal Midcap Fund held 68.3% of its assets in mid-cap stocks, 13.7% in large-caps, 6.7% in small-caps, and the balance in cash and equivalents.

In terms of AI stocks, Motilal Oswal Midcap Fund has an allocation of 6.5% to Persistent Systems. The fund also has exposure to a few other tech companies such as Coforge, KPIT Technologies, and Mphasis that specialise in AI-driven solutions. These stocks form 10% of the fund's assets.

#5: SBI Focused Equity Fund

Launched in October 2004, SBI Focused Equity Fund is the largest scheme in the Focused Fund category having an AUM of Rs 27,962 crore.

Being a Focused Fund, SBI Focused Equity Fund invests in a compact portfolio of a maximum of 30 stocks across marketcaps and sectors.

As of 30 April 2023, SBI Focused Equity Fund invested 52.9% in largecaps, 27.5% in midcaps, 2.2% in smallcaps, 7.1% in overseas equities, 3% in rights, and the balance in cash and debt.

SBI Focused Equity Fund has invested 6.3% in Alphabet Inc., a global tech giant (parent company of Google) which has been leading the AI race. The stock has been part of the scheme's portfolio for over four years now.

Outlook of Artificial Intelligence (AI) on Businesses

The adoption of AI in businesses has surged considerably over the past few years.

AI will continue to play a crucial role in every industry due to its learning, analysing, logic, and reasoning capabilities that were once thought to be exclusively human qualities.

Businesses deploying AI benefit from improved customer relationships, better productivity, enhanced cost savings, and reduced risk of errors.

However, the fear of job cuts due AI remains a concern.

Conclusion

AI has revolutionised our lives and will continue to do so for many years.

This technology is an enabler. It offers many opportunities to complement human intelligence and enhance people's lives. India stands to benefit from the immense potential that AI has to offer.

AI is still in its development stage. It will undergo various changes in the coming years. It could be a while before this theme fully plays out and reaches the masses.

And it's likely that as the technology evolves, those leading the AI race are replaced by new winners.

Due to their active investment strategies, mutual funds are well placed to capitalise on the potential investment returns.

Happy investing.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

Safe Stocks to Ride India's Lithium Megatrend

Lithium is the new oil. It is the key component of electric batteries.

There is a huge demand for electric batteries coming from the EV industry, large data centres, telecom companies, railways, power grid companies, and many other places.

So, in the coming years and decades, we could possibly see a sharp rally in the stocks of electric battery making companies.

If you're an investor, then you simply cannot ignore this opportunity.

Click Here for Full Details

Details of our SEBI Research Analyst registration are mentioned on our website - www.equitymaster.com

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...


FAQs

Which are the top Artificial Intelligence companies in India?

Based on marketcap, these are the top Artificial Intelligence companies in India:

.

You can see the full list of AI stocks here.

And for a fundamental analysis of the above companies, check out Equitymaster’s Indian stock screener which has a separate screen for best AI companies in India.

Which are the top gainers and top losers within the Artificial Intelligence sector today?

Within the Artificial Intelligence sector, the top gainers were HAPPIEST MINDS TECHNOLOGIES (up 3.2%) and KELLTON TECH (up 1.7%). On the other hand, BOSCH (down 0.7%) and ORACLE FINANCIAL (down 0.3%) were among the top losers.

What is artificial intelligence?

Artificial Intelligence, or AI for short, is like having a super-smart robot friend who can think, learn, and make decisions on its own. Just like how humans use their brains to solve problems and make choices, AI uses algorithms and computer programs to do the same thing.

It can recognize faces, understand languages, play games, and even create art. It's like magic, but instead of a wand, AI uses data and math to make amazing things happen.

How should you value AI companies?

Investing in stocks requires careful analysis of financial data to find out a company's true worth. However, an easier way to find out about a company's performance is to look at its financial ratios.

Two commonly used financial ratios used in the valuation of stocks are -

Price to Earnings Ratio (P/E) - It compares the company's stock price with its earnings per share. The higher the P/E ratio, the more expensive the stock.

Price to Book Value Ratio (P/BV) - It compares a firm's market capitalization to its book value. A high P/BV indicates markets believe the company's assets to be undervalued and vice versa.

Equitymaster requests your view! Post a comment on "5 Mutual Funds with Exposure to Artificial Intelligence (AI) Stocks". Click here!