The Hindu Business Line : Mutual funds scale up tech stocks exposure

Kolkata April 20 Technology stocks are calling the shots in the realm of mutual funds. Fund managers have been stepping on the gas when it comes to scaling up their exposure to the tech sector, a trend that seems to be taking a firmer shape at this juncture.

Allocations to technology by diversified equity funds have generally increased in the last few months, culminating in the quarter ending March 31, 2007, compared to the allocation figures pertaining to the end of the last calendar year. A number of funds, cutting across the asset management industry, have re-jigged allocations, a significant part of it in favour of technology.

At the core of the trend is the positive stance taken by fund managers with regard to the sector, a move triggered by a range of factors.

These, MF circles generally suggest, have resulted in an improvement in the business dynamics of tech companies and advances recorded by them in terms of topline and bottomline growth.

Fund circles point out in this context that tech funds, which have given about 30 per cent for the one-year period ending April 18, 2007, have come up exceptionally well, beating all other categories during the period. In comparison, index funds (which are also being feted lately) have delivered roughly 14-15 per cent.

A list worked out by distribution firm Plexus Management indicates that some of the most commonly held counters are such heavyweights as Infosys, TCS, Satyam and Wipro. Most fund managers have invested in these in varying degrees. Included in this list are the likes of Subex, Tulip IT, Tech Mahindra, I-flex and Mphasis BFL.

Those that scaled up tech holdings between December 31, 2006, and March 31, 2007, include JM MF, which has doubled exposure from 6.08 per cent of net assets to 12.11 per cent, according to data provided by Value Research. Some of the others are: ABN AMRO (from 18.85 per cent to 27.78 per cent), Morgan Stanley (from 20.67 per cent to 25.03 per cent), UTI (from 16.28 per cent to 19.3 per cent), Tata (from 17.38 per cent to 20.73 per cent) and Franklin Templeton (from 15.84 per cent to 19.59 per cent).

Tech funds alter holding pattern

The seven players that make up the tech funds space have altered their holding patterns between December and March, Plexus has indicated.

However, Infosys, TCS and Satyam are among the most popular counters for the fund managers concerned.

Franklin Infotech, among the largest in the category, has finetuned exposure to Infosys (from 37 per cent to 40 per cent), TCS (21 per cent to 22 per cent) and HCL Tech (10 per cent to 7 per cent).

ICICI Prudential Technology, which also has a large asset base, has tinkered with Subex (from 8.8 to 7.1 per cent), Tech Mahindra (8.2 per cent to 5.8 per cent) and Nucleus Soft (7.24 per cent to 9.34 per cent).

Tech funds have lately seen an increase in assets, thanks to the perceived turnaround in the sector. Apart from DSP ML Technology.com and Kotak Tech, all the others have well over Rs 100 crore each under management.

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