MFs' exposure to bank stocks hits record high of Rs 48k cr

Mutual fund managers raised their exposure in bank stocks to an all-time high of Rs 48,419 crore (Rs 484.19 billion) in May, amidst a soaring equity market.

According to market regulator Securities and Exchange Board of India, MF investments in banking stocks reached Rs 48,419 crore (Rs 484.19 billion) as on May 31, accounting for 21.59 per cent of their total equity assets under management (of Rs 2.24 lakh crore or Rs 2.24 trillion).

This was also the fourth monthly rise in exposure.

After banking, software is the second most preferred sector with MFs having exposure of Rs 22,986 crore (Rs 229.86 billion), followed by pharmaceuticals (Rs 15,027 crore or Rs 150.27 billion) and finance (Rs 12,152 crore or Rs 121.52 billion).

At current levels, the MF sector has the highest exposure to banking sector since at least August 2009.

Data is not available for sector-wise exposure before August 2009, when the equity funds had deployed Rs 22,587 crore or Rs 225.87 billion (12.73 per cent)

in banking shares.

The previous high was in December 2012, when investment in the sector had risen to Rs 43,659 crore (Rs 436.59 billion).

MFs are investment vehicles made up of a pool of funds collected from a large number of investors.

MFs invest in stocks, bonds, money market instruments and similar assets.

Funds had pumped in Rs 41,104 crore (Rs 411.04 billion) in banking shares at the end of April, while their exposure in the sector was 20.1 per cent of equity AUM.

Equity fund mangers' exposure has risen from 16.6 per cent of total AUM in January to 21.6 per cent in May.