Groww Digest

6 Day Course

Theme: holdings of equity mutual funds

May 27 to June 2, 2024

6 Day Course is a part of our newsletter

series, Groww Digest - all things personal
finance.

Want to get Groww Digest in your email?

Click here: Get Groww Digest

Day 1: Monday
Theme: holdings of equity mutual funds

Equity mutual funds invest in share

markets.

In this week’s course, we’ll try to look at

how some equity funds invest.

Let’s start with large-cap funds.

These funds have to invest at least 80%

of their total money in large-cap stocks.

Large-cap stocks: 100 of the biggest

companies’ stocks.

Large-cap funds (also called blue chip

funds) usually hold anywhere from 50 to
90 stocks at any given time.

Page: 2
Day 2: Tuesday
Theme: holdings of equity mutual funds

After large-cap, we come to flexi-cap

mutual funds.

Flexi-cap mutual funds are very unique.

They have to invest at least 65% of their
total money in stocks.

But that is the only rule. No other limits.

Despite this, most flexi-cap mutual funds

invest mostly in large-cap stocks.

They do invest in mid-cap and small-cap

stocks too — but a lot less than large-cap
stocks.

This is also true for most ELSS mutual

funds (tax-saver funds).

This is why their risk level is considered

only a bit higher than large-cap funds.

Page: 3
Day 3: Wednesday
Theme: holdings of equity mutual funds

Mid-cap mutual funds are required to invest at

least 65% in mid-cap stocks.

Mid-cap stocks: stocks of the 101st to 250th

biggest listed companies in India.

Small-cap mutual funds are required to invest at

least 65% in small-cap stocks.

Small-cap stocks: stocks of companies that are

not in the top 250 listed companies of India.

Mutual funds from both these categories can be

very different.

There is no clear holding pattern that is common

across different mid-cap or small-cap funds.

In the case of both types of funds, they also

invest in large-cap stocks.

This is allowed as long as they stick to the

minimum 65% investment rule.

Page: 4
Day 4: Thursday
Theme: holdings of equity mutual funds

Focused fund — these mutual funds have

to invest at least 65% of their assets in
shares.

Also, they cannot invest in more than 30

stocks at any time.

The idea is to have a focused approach to

investing. Most other mutual funds hold
anywhere from 50 to 100 stocks.

In the case of focused mutual funds, the

fund managers choose up to 30 stocks
that they think are really good.

Because everyone’s idea of good stocks

can be different, 'focused funds’ holdings
can vary a lot.

It also makes it more risky — because of

lower diversification.

Page: 5
Day 5: Friday
Theme: holdings of equity mutual funds

Multi-cap funds: these mutual funds are

required to invest at least 25% in
large-cap stocks, 25% in mid-cap stocks,
and 25% in small-cap stocks.

The remaining 25% — the fund

manager is free to choose.

In such mutual funds, the fund manager

can make very different choices.

So, these mutual funds’ holdings vary

from fund to fund.

There are many other kinds of equity

mutual funds.

In this week’s course, we covered some

of the most popular ones.

Page: 6
Day 6: Sunday
Theme: holdings of equity mutual funds

We’ve reached the end of this week’s course

that started on Monday.

Here’s a test you should take. Get pen and

paper!

Question 1:
Large-cap funds are generally also known as
____?

-Blue chip funds

-Large stock funds
-Big stock fund

Question 2:
Flexi-cap funds must invest at least ____ % in
the stock market.

-50
-75
-65

Page: 7
Day 6: Sunday
Theme: holdings of equity mutual funds

Question 3:
Mid-cap funds and small-cap funds should
invest at least 65% of their total investment in
mid-cap and small-cap stocks respectively.

-True
-False

Question 4:
A ____ fund can hold only 30 stocks at any
point in time.

-Large-cap
-Focused
-Multi-cap

Question 5:
A multi-cap fund must invest 25% of its total
investment in each large-cap, mid-cap, and
small-cap stocks.

-True
-False

Page: 8
Day 6: Sunday
Theme: holdings of equity mutual funds

Answers:

Q1: Blue chip funds

Q2: 65
Q3: True
Q4: Focused
Q5: True

Page: 9
 That’s it for this week!

Want to get Groww Digest in your email?

Click here: Get Groww Digest

See you next week!

—Groww Digest Team

Page: 10