Top 10 Favourite Stocks of Fund Managers in 2015
India's equity fund managers, amid a weak market for most of this year, juggled their top-10 picks. In a year that saw key stock indices hitting all-time highs and subsequently a 15 per cent erosion of value, mutual fund (MF) managers had to frequently change the allocation to stocks or try different counters in their top picks to provide some cushion.
Information technology (IT) major Tata Consultancy Services (TCS) and Tech Mahindra were ousted from the managers' top-10 picks. Replaced now with IndusInd Bank, yet another private lender to enter fund managers' favourite stocks, and four-wheel major Tata Motors.
As January began, Rs 78,330 crore of equity assets were invested in the top 10 scrips. This had increased to Rs 90,740 crore by end-November. The total of equity assets under management has surpassed Rs 4 lakh crore for the first time ever.
Equity fund managers began the year with ICICI Bank, HDFC Bank and State Bank of India (SBI) as the three most sought stocks and infused capital worth Rs 36,500 crore or 12 per cent of their total equity assets in these. Today, SBI is out of the top three, HDFC Bank has pipped ICICI Bank as the most invested stock and another IT major, Infosys, has become the second most owned stock, pushing ICICI to third slot. Infosys is the only IT company to make it to the list of MFs' top 10 holdings.
“HDFC Bank is clearly an unavoidable stock. The growth is consistent for many years and potential to grow further from here is immense. Issues regarding corporate debt have crept in ICICI Bank and, therefore, we have reduced exposure to some extent,” says the chief investment officer (CIO) of a top-10 fund house.
At the start of the calendar year, ICICI had 4.8 per cent or Rs 13,853 crore of the MF sector's equity assets. Exposure to HDFC Bank was 4.1 per cent or Rs 12,013 crore. Now, equity MFs have an allocation of 5.6 per cent (Rs 17,640 crore) to HDFC Bank and 3.85 per cent (Rs 12,099 crore) in ICICI.
Four among the top 10 managed to hold their previous positions. These are Larsen & Toubro at fifth, Axis Bank (6th), Maruti Suzuki (7th) and Reliance Industries (8th). Axis and Maruti saw fund managers raising their allocations by around 70 and 30 basis points (bps), respectively, thus far this year.
“Maruti has done phenomenally well over the past two years in terms of returns. Though there are some changes, as it is outsourcing its core activity to parent Suzuki, it is not going to impact the profitability and we are here to stay with the counter," explains another CIO, who talked on condition of anonymity.
During the year, fund managers tried their hands with several other counters, too, in a volatile market having a downward bias. However, many counters came for a brief period into the top 10 and exited. For instance, ITC was a new entrant at the start of the year but was soon replaced by Tata Motors. Within a month, Bharat Petroleum) and Bharti Airtel were brought in but were replaced by Sun Pharmaceutical Industries and HCL Technologies.