Quantitative mutual funds are likely to have sold their entire stakes in HDFC Bank, months after making large investments in the country’s largest private lender.
The stock, which was among the top two holdings of most of its schemes at the end of June, now does not even feature in any of the top 10 schemes.
Quant MF has managed to dominate the equity scheme performance charts over the past few years, with its high conviction bets performing well.
In 2022, his plans took advantage of the momentum in Adani shares.
Following Hindenburg’s attack on Adani stock in early 2023, the fund manager shifted allocation towards Reliance Industries and Jio Financial.
Investment proved to be a key factor in the performance of their plans over the past year.
However, the fund manager’s performance has been poor in recent months. The drop in performance coincides with the start of an investigation by the regulator into the fund manager’s ability to use blue-chip stocks.
Being the third largest company by market capitalisation with a high free float, HDFC Bank has the highest weighting in the large-cap, banking and financial services indices. Most of the diversified active equity schemes have significant exposure to equities.
Quant MF is one of the few fund managers that has had zero or low allocation to HDFC Bank in the last few years, except for the brief period from May to July.
Despite being attractive from a valuation perspective, HDFC Bank has failed to generate returns to shareholders for some time now.
Its long period of underperformance was expected to end in July due to expectations that its increased weighting in the MSCI index will lead to strong buying by global passive funds.
However, MSCI’s decision to gradually increase its weighting proved to be a deterrent.
First published: September 4, 2024 | 19:30 IS
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