Asset management companies (AMCs), which invest the pooled funds of retail investors in securities, are said to provide more diversification, liquidity, and professional management than individual investors can themselves manage. But a look at the stocks held by 28 asset management companies show that one-third of their assets is invested in only 10 stocks. Their favourite 10 being: RIL, SBI, Bharti, ONGC, ICICI Bank, Infosys, Bhel, L&T, HDFC Bank and HDFC.
AMCs of fund-houses such as Morgan Stanley Investment Management, Benchmark Asset Management, Deutsche Asset Management and LIC Mutual Fund Asset Management have invested funds to the tune of Rs 200 crore to Rs 1,100 crore in these 10 stocks.
This means that this type of top-heavy form of AMCs' equity portfolio could be affected by a swing in just a few stocks.
As per latest data, AMCs held maximum assets in form of shares in RIL (Rs 4,592 crore), followed by SBI (Rs 3,855 crore), Bharti (Rs 3,508 crore), ONGC (Rs 2,995 crore) and ICICI Bank (Rs 2,954 crore). While these pivotal stocks are a part of sensex, these stocks account for 7% to as high as 61% of AMC assets invested in stocks.
"A high concentration could mean a compromise. Though 30% is a good mark which shows diversification, anything above 50% can signal weakness," said Dhirendra Kumar of Value Research, a fund-tracking firm. He added that a portfolio concentration skewed towards large-caps is far better than one skewed towards mid-caps and small-caps.
Going by that 30% cut-off, AMCs of fund-houses such as Birla Sun Life, ICICI Prudential, Quantum MF, Canara Robeco, Tata MF, IDFC MF, Principal MF, ING MF and Sundaram BNP MF, among others will fall under the category. Still, its interesting to note most fund managers of AMCs agree that there are around 10 or 12 good investment opportunities available.
"These favourite 10 stocks are a play on the great Indian story that is set to play out in the next few years. Reliance's Jamnagar refinery, State bank of India solidarity, Bharti's retail as well as telecom growth or Infosys' IT prowess are all part of the economic superhouse story. However, with all of them making 70% to 80% of sensex, the downside always exists.
AMCs of fund-houses such as Morgan Stanley Investment Management, Benchmark Asset Management, Deutsche Asset Management and LIC Mutual Fund Asset Management have invested funds to the tune of Rs 200 crore to Rs 1,100 crore in these 10 stocks.
This means that this type of top-heavy form of AMCs' equity portfolio could be affected by a swing in just a few stocks.
As per latest data, AMCs held maximum assets in form of shares in RIL (Rs 4,592 crore), followed by SBI (Rs 3,855 crore), Bharti (Rs 3,508 crore), ONGC (Rs 2,995 crore) and ICICI Bank (Rs 2,954 crore). While these pivotal stocks are a part of sensex, these stocks account for 7% to as high as 61% of AMC assets invested in stocks.
"A high concentration could mean a compromise. Though 30% is a good mark which shows diversification, anything above 50% can signal weakness," said Dhirendra Kumar of Value Research, a fund-tracking firm. He added that a portfolio concentration skewed towards large-caps is far better than one skewed towards mid-caps and small-caps.
Going by that 30% cut-off, AMCs of fund-houses such as Birla Sun Life, ICICI Prudential, Quantum MF, Canara Robeco, Tata MF, IDFC MF, Principal MF, ING MF and Sundaram BNP MF, among others will fall under the category. Still, its interesting to note most fund managers of AMCs agree that there are around 10 or 12 good investment opportunities available.
"These favourite 10 stocks are a play on the great Indian story that is set to play out in the next few years. Reliance's Jamnagar refinery, State bank of India solidarity, Bharti's retail as well as telecom growth or Infosys' IT prowess are all part of the economic superhouse story. However, with all of them making 70% to 80% of sensex, the downside always exists.
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