Story Background - A detailed report by Hindenburg Research made charges of fraud, duty evasion, scams and accounting manipulation against the Adani group.
Adani group stocks like Adani Transmission, Adani Total Gas and Adani Green Energy have lost between 50% to 70% since the release of this explosive report on January 24.
Impact on Portfolio Returns, Mutual Funds
1. Passive funds or ETFs have a higher exposure towards Adani Group
More than 50% of the total AUM in Adani stocks is held by index funds and arbitrage funds. Notably, stocks like Ambuja Cements, Adani Enterprises, Adani Green, Adani Transmission and Adani Total Gas are a part of both the Nifty Next 50 and Nifty Alpha 50 indices.
Passive investing has done more harm than good in this situation. Nifty Next 50 and Nifty Alpha 50 indices have lost over 7.5% in the past two weeks.
2. Quant, NJ, Motilal Oswal, Nippon Mutual Fund Houses have the highest exposure in Adani group stocks (amongst the peer Mutual Fund companies)
And we're glad to report, for Nivesh Mitr's clients we chose to forgo the high returns by AMCs like Quant and hence, have NIL exposure in all Adani stocks in our client portfolios.
The schemes of Quant Money Managers have generated best-in-class returns in the past three years, partly by riding the upswing in Adani stocks.
However, most of its active schemes have underperformed the benchmark indices in the past two weeks due to the higher share of Adani group stocks.
List of Top 15 equity schemes holding Adani Group Stocks -
Conclusion: Nifty 50 ETF has an exposure to Adani Group stocks and Actively managed funds from Fund houses like Nippon, Quant, UTI, Franklin - none of which are a part of Nivesh Mitr's client's portfolios