The mutual fund-bias towards software stocks persists despite the hammering of technology-media-telecom (TMT) stocks over the past few weeks. A study conducted by personalfn.com reveals that some open-ended growth funds continue to take a disconcertingly higher exposure to software stocks which could spell even more trouble for them in the coming days.

In January 2000, in an interview to personalfn.com, Mr Ajay Srinivasan (Managing Director, Prudential-ICICI Mutual Fund ) had remarked that investors were willing to take some risk for higher growth and that is the reason why they had taken to TMT stocks as opposed to the more staid, consumer products and refinery stocks. Mutual funds justified their over-exposure to TMT stocks giving the same rationale as explained by Mr Ajay Srinivasan.

But with the huge correction and volatility in TMT stocks, one would think funds would downsize their exposure to these stocks. However, the table below shows otherwise. Funds continue to show huge exposure to software stocks in their portfolios. Our study shows that these funds had over 1/3rd of their assets in software stocks, which is a matter of some concern to investors. As TMT stocks continue to be tanked heavily, the next few days will see more decline in the net asset values (NAVs) of these funds. (Visitors can use the interactive˜Portfolio queries module in the Mutual Funds section to run more studies of a similar nature).

Open-ended schemes	Date of holding	% Holding	NAV (Rs)
Tata Tax Savings Fund	30 Apr,2000	73.0	15.2
Tata Life Sc & Tech. Fund (I)	30 Apr,2000	67.0	12.5
Birla Advantage Fund	31 Mar,2000	65.0	41.8
Birla Balance (Growth)	31 Mar,2000	65.0	11.6
JM Equity Fund (Gr)	28 Apr,2000	54.0	10.8
Tata Young Citizens Fund	30 Apr,2000	47.0	10.7
Magnum Multiplier Plus 1993	1 Apr,2000	43.8	18.8
DSP ML Equity Fund	31 Mar,2000	43.1	18.6
Tata Pure Equity Fund	30 Apr,2000	41.0	12.8
JM Balanced Fund (Gr)	28 Apr,2000	41.0	16.0
Magnum Taxgain	1 April,2000	40.4	23.4
Unit Scheme - 1995 (Gr)	3 Jan,2000	37.5	193.1
Zurich India Top 200	31 Mar,2000	36.6	15.6
K 30	2 May,2000	36.4	19.1
Zurich India Equity (Gr)	31 Mar,2000	36.0	20.1
Sun F & C Value Fund (Gr)	30 Apr,2000	36.0	21.3
Kothari Pioneer Prima Plus (Gr)	30 Apr,2000	35.9	23.3
Pru ICICI Tax Plan (Gr)	31 Mar,2000	34.9	12.9
Pru ICICI Growth Plan (Gr)	31 Mar,2000	34.0	21.7
Magnum Balanced Fund	1 Apr,2000	33.8	14.8

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