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Friday, Jan 19, 2007
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Business Daily from THE HINDU group of publications Friday, Jan 19, 2007 ePaper |
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Stock Markets Markets - Mutual Funds Nilanjan Dey
Reasons cited Vital to meet redemption requests placed by some investors anxious to get out when the market is peaking Others point to a certain measure of profit booking that has taken place in recent weeks, which has been recorded in the end-of-the-month tallies.
Kolkata , Jan. 18 Cash is king for some equity funds, the conventional logic of staying as fully invested as possible in the midst of robust sentiments notwithstanding. As the end-December portfolios reveal, a number of diversified funds have a substantial cash component, a trend that is being partly attributed to more-than-usual profit booking by a section of fund managers. Some of the funds in question have 8-15 per cent of their assets in cash, the allocation going up to well over 15 per cent in a few extreme cases. A 15 per cent cash exposure would be considered more than what is normal by most observers. The situation, some sections believe, is not quite in line with the spirit of the times, reflected as it is in a resilient equity market. Fund houses, on their part, underscore the need to have adequate cash in their portfolios, mostly deemed necessary to meet redemption requests placed by some investors anxious to get out when the market is peaking. Others point to a certain measure of profit booking that has taken place in recent weeks, which has been recorded in the end-of-the-month tallies.
Plexus list
A list worked out by distribution firm Plexus Management shows that 20 or so diversified funds have more than 10 per cent in cash. These include Can Growth Plus (19.4 per cent), Sahara Wealth Plus (17.2 per cent), DBS Chola Global Advantage (16.1 per cent), Principal Focussed Advantage (15.5 per cent) and SBI Magnum Global (13.3 per cent). Mr Amandeep S. Chopra of UTI MF puts it down partially to profit booking, which he says can often become necessary because of the situation prevailing in the market. Cash and certain other liquid assets, he adds, are frequently a result of a fund manager's decision to liquidate key holdings and remain comfortable in the knowledge that large redemption requests, if any, will be easily dealt with. Mr Prasunjit Mukherjee, who heads Plexus, feels that December was perhaps an exceptional month for some funds in terms of their exposure to liquid assets. "In a number of cases, it is evident that the fund managers have placed their faith on cash, possibly a bit more than what we are used to seeing. Clearly, some of them have taken profits," he said.
For some, it isn't trash
A handful of funds, including a few that have recently wrapped up NFOs and are yet to deploy the money they have raised, have closed December with extra-large cash components, the Plexus search has found. The newly-launched JM Telecom Sector Fund, for instance, has as much as 57.1 per cent in cash, while for compatriot JM Financial Sector Fund, this accounts for 13.8 per cent. Sundaram BNP Paribas Select Midcap, which is certainly not as new as the two JM MF products, has 20.3 per cent in cash. Three funds in the Reliance MF stable and three in the Birla Sun Life MF family have a fair exposure to cash. These include Reliance Diversified Power Sector Fund, which has 13.9 per cent, and Birla Sun Life Basic Industries Fund, which has 15.9 per cent.
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