The June 2014 quarter witnessed a clear trend reversal with defensive sectors losing favour to cyclical ones. Fund managers shifted their focus towards cyclical and sensitive sectors such as Financial Services, Basic Materials, Consumer Cyclicals and Industrials.
Once again, Financial Services continued to be the most owned sector in the portfolios of equity funds, followed by Industrials which eased out Technology to become the second most popularly held sector in equity funds’ portfolios. In fact, ICICI Bank and L&T turned out to be the most popular stocks in the second quarter of 2014.
In the case of debt portfolios, fund managers increased the average maturity across all duration products during the quarter ended June 2014. This goes to indicate that they are of the opinion that rate cuts are imminent in the near future and want to ride the yield curve by buying long-term bonds with the hopes of making a profit as yields fall. Allocation to sub-AAA rated papers also went up.
We analysed the portfolios of equity mutual funds during the second quarter of 2014. We present the observations in the Morningstar India Fund Portfolio Scanner.
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