Mutual Funds Cut Exposure To Equitis

Fund managers of equity diversified funds pruned their exposure to equities as an asset class last month. The total market value of funds in equities has gone down to 90.67 per cent in December 20 06 from 91.64 per cent in November 2006, while cash holdings of funds have increased to 9.33 per cent in December 2006 from 8.36 per cent in previous month.
The equity diversified scheme segment recorded the largest appreciation over the month. Software, banking, construction and electric equipment sectors attracted the most exposure from mutual funds in December. State Bank of India, Infosys Technologies, Reliance Industries, ICICI Bank and Bharti Airtel were the top picks. Automobiles, entertainment and pharmaceuticals sectors witnessed additional buying by four and more than four funds, said HDFC Securities in a research report. This kind of a change is very insignificant to impact the market. Since it's year end they have got lot of money. I don't think fund managers are expecting a correction and so they are increasing their cash holdings. Sundaram Mutual Fund has been for the past four months holding 20-30 percent of their corpus in cash. Pru ICICI Dynamic Fund, Reliance Vision Fund and Reliance Equity Opportunities Fund schemes with more than Rs 1,000 crore corpus were the leaders in the equity diversified category posting returns of 5.63 per cent, 4.99 per cent and 4.94 per cent.