The funds deployed 21.85 percent of their equity assets under management (AUM) into the banking sector
Mutual funds waded into bank shares in December 2018, seeing good growth outlook, profitability and capital ratios, data released on the Securities and Exchange Board of India showed.
The funds deployed 21.85 percent of their equity assets under management (AUM) into the banking sector, the highest allocation to any sector and the next-best sector fund houses ploughed money into was financials.
The data released on the website of the Securities and Exchange Board of India (SEBI) showed that 43 mutual funds had invested Rs 2,22,523 crore in bank stocks in December. The numbers of November at 21.58 percent or 2,13,717 crore, and are a shade higher than the 21.04 percent in October.
Mutual fund managers attributed the increased allocation of bank shares to good growth outlook and profitability.
Generally, banking is the most preferred sector with fund managers as they cannot take a bearish call on the banking sector, given the sector’s 35 percent weight in the S&P BSE index.
After banks, finance was the second-most preferred sector with fund managers. Equity fund managers’ deployment in finance software stocks was at Rs 98.052crore, followed by software (Rs 86,094 crore), consumer non-durables ( Rs 76,153 crore) and pharmaceuticals (Rs 56,115 crore).
"Select private sector bank and select non-banking finance companies to continue to show good growth outlook, profitability, and capital ratios," Mahesh Patil, Chief Investment Officer-Equity, Aditya Birla Sun Life Mutual Fund, had said at an event to discuss 2019 outlook.
According to most fund managers, life insurance and general insurance companies offered promising opportunities due to high growth driven by low penetration and increasing financialisation of savings.Fund houses were upbeat on the IT sector given the increased investments in the front end, UI (User Interface) and cloud migration which is driving the demand for companies.Not sure which mutual funds to buy? Download moneycontrol transact app to get personalised investment recommendations.