Seven In 10 Stocks Favoured By Mutual Funds Underperform Peers
Of the top 50 companies in terms of stake held by mutual funds, 34 have delivered returns below their Nifty 500 peers' year-to-date average.
Despite the mutual funds industry’s heavy bets on many Indian companies, nearly 70% of the top-held stocks have largely underperformed their peers.
Of the top 50 companies in terms of stake held by mutual funds, 34 have delivered returns below their Nifty 500 peers' year-to-date average.
Nifty 500 companies have delivered an average return of 23.05% on a year-to-date basis, but the average return of these top 50 companies is comparatively muted at 3.52%.
Many stocks such as Kalpataru Projects International Ltd., V-Guard Industries Ltd. and Blue Star Ltd. have been standout performers, but the overall trend of underperformance is exacerbated by the underperformance of several blue-chip stocks, including HDFC Bank Ltd., ICICI Bank Ltd., and Axis Bank Ltd., in which mutual funds hold 24%, 29% and 23% stake respectively, according to data from Bloomberg.
Cyient Ltd., in which mutual funds hold 23% stake, leads the pack with a year-to-date decline of 25.02%, followed closely by Equitas Small Finance Bank Ltd.'s 23.63% drop. Birlasoft Ltd. and Sonata Software Ltd., with mutual fund stake of 19% each, declined over 15% year-to-date.
High mutual fund stake did not equate with good returns for PVR Inox Ltd., IndusInd Bank Ltd., and JK Lakshmi Cement Ltd. either, which saw negative returns of 14.54%, 12.12%, and 9.79%, respectively.
