Equity MFs stick to their top picks as market trades at historical highs

The chase for a few major stocks among India’s equity mutual fund (MF) managers has intensified this year. They are largely sticking to select stocks in their most-owned list as the markets trade at an all-time high, with higher valuations making several market participants uncomfortable.

So far this calendar year, of the top 10 stock picks, fund managers have maintained eight and replaced two, Reliance Industries and Axis Bank, with HDFC and Kotak Mahindra Bank. Fund managers have increased their quantum of investments in the top 10 by 43% so far in 2017 to Rs 1.52 lakh crore, from Rs 1.06 lakh crore.

According to fund managers, heavyweights HDFC Bank, HDFC, ICICI Bank, ITC and Larsen & Toubro provide some safety against quick value erosion. This could be why they are not shying away from pumping incremental money into these stocks. They feel this juncture, risk management is more necessary than chasing of returns. Given this, there are not many alternatives to their existing top picks.