Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Funds still bank on software - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Oct 10, 2000

    Funds still bank on software

    Despite the volatility in the sector, diversified growth funds continue to bank on software in a big way.

    Most fund managers (Tata Mutual Fund, Sun F&C MF, JM MF, Kothari Pioneer MF) we have interviewed in the past still have unshakeable faith in software and see it as the main growth driver in future. This is notwithstanding the volatility that has become second nature with software.

    Diversified, Growth Funds Date of holding % Holding NAV (Rs)
     Birla Advantage Fund 30 Jun,2000 68.0 36.5
     Canexpo 31 Jul,2000 58.7 17.5
     Tata Tax Savings 31 Jul,2000 58.0 12.1
     Canpep 1993 31 Jul,2000 56.8 20.4
     IL&FS Gr & Val (Gr) 15 Jul,2000 52.3 12.6
     JM Equity Fund (Gr) 31 Aug,2000 47.0 10.2
     K P Tax Shield (Gr) 31 Aug,2000 46.7 26.7
     Birla Balance (Gr) 30 Jun,2000 46.0 11.1
     Tata Young Citizens 31 Jul,2000 45.0 10.5
     Tata Balanced 31 Jul,2000 43.0 14.4
     Alliance Equity Fund (Gr) 31 Aug,2000 41.6 35.5
     Alliance Cap. Tax 1996 31 Aug,2000 41.4 66.0
     Franklin Growth Fund 31 Aug,2000 41.0 6.8
     Zurich(I) Equity (Gr) 29 Sep,2000 40.9 19.1

    (The above table shows only non-IT funds with more than 40% exposure to software)

    Some diversified growth funds are so highly skewed towards software, that the fund objective ought to be changed from ‘growth’ to ‘explosive growth’. Which brings us to the investor’s perspective. How does high software allocation work to his benefit or detriment?

    A high software allocation combined with generous allocations to telecom and media (which are equally volatile) without a hedge in the form of old economy and FMCG (fast moving consumer goods) stocks could work to the investor’s detriment. A high TMT (technology, media, telecom) allocation in the absence of a substantial fixed income hedge will introduce a great degree of volatility in the fund’s returns.

    So there must be a hedge, be it in the form of old economy stocks or a higher fixed income allocation. Without it, the fund and therefore the investor, could be exposing itself to a lot of unwanted volatility and instability. The investor must look out for this hedge before taking exposure in a diversified growth fund.



    Equitymaster requests your view! Post a comment on "Funds still bank on software". Click here!


    More Views on News

    The Right Financial Advisor Is Around the Corner (Outside View)

    Mar 10, 2016

    An opportunity to find an impeccably trustworthy and competent financial guardian is in the offing.

    Why financial planning should be dull and boring (Mutual Fund Corner)

    Feb 29, 2016

    Most financial planners come out as whiz kids who throw around financial jargon. But financial planning can be actually easy, provided one follows a disciplined approach.

    What Are E-Wallets And How To Use Them (Mutual Fund Corner)

    Feb 12, 2016

    PersonalFN highlights the benefits of parking a portion of your expenses in e-wallets and using them efficiently.

    Is Consumption Boom Over In India? (Mutual Fund Corner)

    Feb 2, 2016

    Mutual funds take a bearish call on the FMCG sector. The sector has started playing out due to a combination of slower growth and expensive valuations.

    How to Find a Saint Amongst Sinners? (Mutual Fund Corner)

    Feb 1, 2016

    Ethical practices help build long lasting relationships, and healthy long-term business relationships are often mutually rewarding. But PersonalFN is of the view that the financial services industry in India seems to have forgotten this.

    More Views on News

    Most Popular

    A 'Backdoor' to Multibaggers: It's Like Investing in Asian Paints Ten Years Ago(The 5 Minute Wrapup)

    Aug 10, 2017

    Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.

    The Most Profitable Investment in the History of the World(Vivek Kaul's Diary)

    Aug 8, 2017

    'Yes, it looks like a bubble. And, yes, it's like buying a lottery ticket. But there's something happening that has never happened before. It's an evolutionary leap in money itself.'

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms