New Delhi: High volatility in the stock markets is forcing mutual funds (MFs) to shift focus from riskier small- and mid-cap stocks to more liquid and less risky large-cap stocks, according to data provided by MF tracking firm Value Research India Pvt. Ltd.
Data shows that between January and October this year, about 26 of the 224 MFs switched portfolios from mid-cap to large-cap. Moreover, 135 funds increased exposure to large-cap stocks by an average 10% as against 88 funds that decreased the share of large-cap stocks in their portfolios during the period.
Value Research classifies large-cap as those stocks that account for 70% of the market capitalization. Those between 70% and 90% are mid-cap, while stocks accounting for the remaining 10% are classified as small-cap.
Analysts say these figures could go up as redemption pressure grows. “Mutual funds have always been a mix of large- and small-cap stocks. In future, however, they will increasingly shift to large-cap stocks as they are under pressure and have liquidity fears, too,” Dhirendra Kumar, chief executive of Value Research, said.
Birla Sun Life India Opportunities, HDFC Capital Builder, Sundaram BNP Paribas India Leadership, Tata Equity Opportunities and LICMF Equity are among the funds that have switched portfolios.
“In all our schemes, we have kept the mandate in terms of focusing on large-cap and mid-cap stocks,” said A. Balasubramanian, chief investment officer of Birla Sun Life Asset Management Co. Ltd. “We are investing more in large-caps considering that these companies could be the ones to give upward movement to the markets.”