Adani Group firms’ stocks are underweight in actively managed mutual funds

Even as various Adani Group companies have soared in 2020 and 2021, their stocks are underweight in actively managed mutual funds compared with indices. Fund houses with the highest weights in Adani stocks hold them in index funds, where they have to replicate an index without any managerial discretion. Alternatively, fund houses hold such stocks in hybrid schemes with strategies such as arbitrage, where the bet is not on the underlying stock. The underlying stock is hedged with derivatives to benefit from the spread between the two.

The top three mutual fund schemes in terms of allocation to Adani Green Energy as a percentage of scheme assets are ICICI Prudential Select Midcap ETF, Nippon India ETF Junior BeES, and ICICI Prudential Nifty Next 50 Index Fund.