Indian mutual fund managers say that they were not caught unawares by the sharp volatility in recent days, but had prepared for it by reducing their exposure to small-cap stocks and moving towards blue-chips.
According to data from ValueResearch, 29 out of 52 multi-cap funds increased their large-cap stocks’ exposure between September and December, while 32 funds reduced their small-cap stock exposure during the same period.
“We have observed fund houses moving to larger sized stocks in the past 3-5 months. For example, we have seen many small-cap funds booking profits in small caps and shifting to mid-cap stocks and mid-cap funds buying nascent large-cap stocks. We also noticed a shift to defensive sectors a quarter ago,” said Vidya Bala, head of mutual fund research at FundsIndia.com, a mutual fund tracking firm.