MF investments in IT stocks hit all-time high in Sept

Mutual fund is an investment vehicle made up of a pool of funds collected from many investors for the purpose of investing

The mutual fund industry is betting big on software companies as its equity exposure to the sector climbed to a fresh all-time high of around Rs 32,000 crore at the end of September.

This also marks the fourth consecutive rise in mutual fund (MF) industry's exposure to software stocks.

Mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets.

The funds' investment in software stocks stood at Rs 31,834 crore as on September 30, 2014, accounting for 10.83% of their total equity assets under management (AUM) of Rs 2.94 lakh crore, according to data available with the Securities and Exchange Board of India (Sebi).

At current levels, the MF industry has the highest exposure to software sector since August 2009. Data is not available for sector-wise exposure before August 2009, when the equity funds had deployed Rs 11,913 crore (6.71%) in software shares.

The previous high was in August this year when investment in the sector rose to Rs 29,668 crore.

According to market participants, MFs have been showing interest in software stocks since the beginning of the year amid rising equity market.

They believe that the ongoing market rally might see mutual fund assets getting diversified.

This year has seen a consistent growth in investment in software stocks by equity fund managers and fund infusion has grown from Rs 27,772 crore in January to Rs 31,834 crore in September.

Besides, mutual fund managers raised their exposure in bank stocks to an all-time high of over Rs 55,398 crore in September this year, which is the highest among all the sectors.

Among others, MFs have an exposure of Rs 21,908 crore in pharma space, followed by auto (Rs 18,892 crore) and finance (Rs 16,358 crore).