The Thursday stock market crash has forced the mutual
fund managers to restructure their equity portfolios.
Most asset management
companies (AMCs) with high exposure in technology stocks
took a severe hammering as the stock market crashed in
the aftermath of the lower-than expected guidance by tech
major Infosys. Most tech funds crashed by anywhere between
10 and 16 per cent in a single day.
According to industry
sources, the AMCs are now slowly switching their exposure
from technology to other growth-oriented sectors such
as pharmaceuticals and old economy or to the debt market.
Says Kotak Mahindra
Mutual Fund equity fund manager Vetri Subramaniam: "After
the Thursday's aftermath, the shift is bound to happen.
Fund managers have to look at various options and if they
find the tech sector not very positive at this point of
time they will go to some safe sectors to balance the
portfolios and improve their net asset values (NAVs)."
last Thursday, Franklin Infotech lost around 16 per cent
as its net asset value dipped to Rs 10.74. Other tech
funds such as UTI Software Fund lost 15. 6 per cent, while
Kotak Mahindra MF's K-tech was down 15 per cent as its
NAV plunged below Rs 2.5. SBI IT Fund was also down by
14 per cent.
A senior official
with HDFC MF says the fund managers have started to restructure
their equity portfolios and are now looking at those sector
which can give better returns. "Sectoral funds are
always more risky than normal equity funds. But, now the
focus may shift to more balanced funds where fund managers
can hedge their risks."
Equity funds with
diversified equity portfolios managed to survive the Thursday
crash. While the Sensex lost 3.4 per cent, the NAVs of
most diversified equity funds like Zurich India Equity,
Alliance Capital and Sun F&C lost only 0.5 to 2 per
a senior Unit Trust of India official: "It is too
early for fund managers to switch their tech portfolios
to other sectors. The Infosys stock is still on a growth
path. There is no need to panic based on the future guidance
by only one company. The IT stocks have been delivering
good returns to the MF industry during the past few years."