Mutual fund schemes have significantly reduced their exposure to information technology stocks since the Nifty IT index reached its all-time high of 45,995.80 on December 13, 2024. Concerns over artificial intelligence disruption, slowing growth in the technology sector and changing portfolio allocations have contributed to a shift in the sector's representation across mutual fund portfolios.

An analysis of ACE MF data shows that several schemes that allocated more than 30 percent of their portfolios to IT stocks in December 2024 had reduced their exposure to single-digit levels by September 2026.

Groww Multicap Fund recorded the sharpest decline among the 10 schemes with the highest IT allocations in December 2024. Its exposure fell from 54.73 percent to 4.75 percent, a reduction of 49.98 percentage points. Samco Multi Cap Fund followed, with its allocation declining from 36.97 percent to 2.63 percent, a decrease of 34.34 percentage points.

Other schemes, including HDFC Flexi Cap Fund, HDFC Large Cap Fund and DSP Large Cap Fund, also recorded substantial reductions in their IT allocations. Across the 10 schemes, the simple average allocation to IT stocks declined from 33 percent in December 2024 to 6.39 percent in September 2026, representing a decrease of 26.61 percentage points.

Parag Parikh Flexi Cap Fund was a relative exception, with its IT allocation falling from 28.53 percent to 16.17 percent. The scheme recorded the smallest decline among the funds in the December 2024 comparison and remained among those with the highest IT exposure in September 2026.

The latest rankings indicate a shift in the funds with the largest IT allocations. Motilal Oswal Midcap Fund topped the September 2026 list, with 23.73 percent of its portfolio invested in IT stocks, followed by Parag Parikh Flexi Cap Fund at 16.17 percent.

Some schemes increased their exposure during the period. LIC MF Midcap Fund's IT allocation rose marginally from 14.95 percent to 15.01 percent, while Taurus Mid Cap Fund's allocation increased from 12.09 percent to 14.76 percent. Sundaram Large and Mid Cap Fund, UTI Flexi Cap Fund and Baroda BNP Paribas Flexi Cap Fund were also among the schemes with relatively high IT allocations, ranging between 13 percent and 15 percent.

However, a decline in a fund's IT allocation does not necessarily indicate that the fund manager actively sold IT stocks. Sector weights can fall when IT shares underperform other portfolio holdings, even if the number of shares held remains unchanged. Fresh inflows, portfolio rebalancing and changes in investments across other sectors can also influence allocation percentages.

The data highlights the extent to which mutual fund sector exposure can change over time. For investors, reviewing these allocations can help identify shifts in portfolio composition, although sector weights alone do not establish the reasons behind individual fund managers' decisions.