Monday, June 25, 2007

Mutual funds wary about realty

The global funds are gung-ho about the prospects of India�s real estate sector and have committed billions of dollars, but the Indian mutual funds are treading cautiously. The fund managers are concerned about �overstretched and unjustified� valuations of real-estate stocks and are quietly reducing their exposure to them.

�The fund managers are not investing in companies whose business models are purely dependent on residential and commercial properties. Valuation was always a concern with this sector. Attempts were made in the past to bring in transparency, but questions about the future value of the landbanks and the logic applied to derive such value, still remain,� said a top fund manager with a leading domestic mutual fund, which recently shed its real estate exposure. He also admitted that fears of a real estate bubble negatively impacted the plans of fund houses to invest in real estate firms.........Mutual funds wary about realty


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