Adani Group firms’ stocks are underweight in actively managed mutual funds

- Advertisement -

Even as various Adani Group companies have soared in 2020 and 2021, their stocks are underweight in actively managed mutual funds compared with indices. Fund houses with the highest weights in Adani stocks hold them in index funds, where they have to replicate an index without any managerial discretion. Alternatively, fund houses hold such stocks in hybrid schemes with strategies such as arbitrage, where the bet is not on the underlying stock. The underlying stock is hedged with derivatives to benefit from the spread between the two.

The top three mutual fund schemes in terms of allocation to Adani Green Energy as a percentage of scheme assets are ICICI Prudential Select Midcap ETF, Nippon India ETF Junior BeES, and ICICI Prudential Nifty Next 50 Index Fund. Their allocations are 5.36%, 3.19% and 3.19%, respectively, of their scheme assets, according to data from Rupeevest as of 30 April. The Adani Green Energy stock is up 6.6 times since the start of 2020.

In case of Adani Enterprises, the top three schemes are Aditya Birla Sun Life Equity Savings Fund, ITI Arbitrage Fund, and UTI Nifty 200 Momentum 30 Index Fund with weights of 9.62%, 8.43% and 6.74%, respectively. An equity savings fund typically uses derivatives to hedge part of its equity exposure and in that respect is similar to an arbitrage fund. A similar pattern is seen in Adani Total Gas and Adani Ports and Special Economic Zone Ltd. In case of the latter, the top holders are infrastructure or transport sector funds such as HSBC Infra Equity or UTI Transportation and Logistics Fund, with allocations of 8-9% of assets apart from arbitrage funds.

“Fund managers would prefer to invest in companies that are widely tracked by analysts and have a transparent structure. They also tend to avoid highly leveraged companies. This is why actively managed funds have avoided groups such as Adani, in my view,” said Shyam Sekhar, chief ideator, iThought Advisory.

Subscribe to Mint Newsletters

* Enter a valid email

* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!


Disclaimer: This post has not been edited by our staff and is published from a syndicated feed. The Original Source of this post can be found at Source link


Govt. mulls shutting down private pharmacies at govt. hospitals

The government is exploring the possibility of shutting down private pharmacies on the premises of State-run hospitals. A list...

At 25, Kudumbasree gears up to face new challenges

Said to be the largest women’s network in the world, the organisation is celebrating its silver jubilee Said to be the largest women’s network in...

Sweden ends neutrality, joins Finland in seeking NATO berth

Sweden has decided to follow neighboring Finland and apply for NATO membership because of Russia's invasion of Ukraine Sweden has decided to follow neighboring Finland...

Pratap Reddy is new city police chief

The State government on Monday transferred city Police Commissioner Kamal Pant, replacing him with C.H. Pratap Reddy, who was serving as Additional Director-General of Police (Law and...
- Advertisement -

More Articles

- Advertisement -