Category Archive : Mutual Funds

10 Most Favourite Stocks of Mutual Funds

10 Most Favourite Stocks of Mutual Funds

Stocks with Highest Allocation in Equity Mutual Funds


In this article, we are going to see the 10 most favourite stocks of mutual funds considering data as on August 2019. These 10 stocks are having highest allocation in equity mutual funds.

10 Most Favourite Stocks of Mutual Funds

  • As far as the equity oriented mutual funds are concerned (funds having equity allocation), the total AUM as on August 2019 is around Rs.10.31 Lakh Crore.
  • This AUM of Rs.10.31 Lakh Crore is contributed by :
    1. Pure Equity Funds
    2. Hybrid Oriented Funds (with Equity allocation)
    3. Index Funds
    4. Index ETFs
    5. Sectoral Funds
  • It means the above all type of funds have made investments in stocks worth of Rs.10.31 Lakh Crore in stocks.
  • Indian Mutual Fund industry’s Average Assets Under Management (AAUM) stood at Rs.25.64 Lakh Crore in August 2019. So we can see, around 40% of the total AUM of the entire mutual fund industry is contributed from investments in stocks.
Total AUM of Equity Mutual Funds
Total AUM of Equity Mutual Funds

Which are the top 10 stocks contributing to this 10.31 lakh Crore AUM?

Not surprisingly, out of these 10 stocks, 6 stocks belongs to banking and financial services sector (3 corporate banks, 2 retail banks and 1 housing finance company). Out of the rest 4 stocks, one company each from IT, construction and Engineering, FMCG and diversified conglomerate.

  10 Most Favourite Stocks of Mutual Funds
10 Most Favourite Stocks of Mutual Funds

1. HDFC Bank

  • HDFC Bank is the stock having highest allocation in total mutual funds portfolios with equity allocation.
  • Around Rs.71,142.1 Cr is invested in HDFC bank by all mutual funds. So, if we consider the total AUM of Rs.10.31 Lakh Crore, HDFC bank alone is holding almost 6.9% of total equity AUM of all the mutual funds. It shows the confidence all the mutual fund houses is having for HDFC Bank.
  • HDFC Bank is a Retail-oriented bank. It has given the profit growth of almost 20-25% y-o-y since last 10 years, having a great consistency in profit growth numbers. For the same reason, HDFC Bank has been enjoying a premium valuation in the market.

2. ICICI Bank

  • ICICI Bank is the second highest stock in terms of allocation by mutual funds in their portfolios.
  • Mutual funds have made a investment of around Rs.59,465.4 Cr in ICICI Bank out of total Rs.10.31 Lakh Cr equity investment. Thus, ICICI Bank is holding 5.7% share in total equity mutual fund AUM.
  • ICICI bank is a corporate bank. The NPA pressure of corporate banks from last 2-3 years is now fading down slowly. The profits of corporate banks are going to be promising in coming quarters. And with the improved earnings, Earnings per share of corporate banks and overall Sensex and Nifty Indices can go up in future. Thus, with these improved EPS numbers, price-to-earnings ratio can be rationalized in course of time.

3. Infosys Ltd.

  • Infosys is the only one IT stock in 10 most favourite stocks held by mutual funds.
  • It might be because of the higher percentage of promoter holdings (72.05%) in case of TCS. The free float market capitalization of TCS is very small. As a result, there is very little scope for the domestic institutional investors (DIIs) like mutual funds to buy the stock (TCS) and include it in their portfolios.
  • On the other hand, in case of Infosys, promoter holding is only 13.15%. So there is very good scope for mutual funds to buy the healthy growth delivering IT stocks like Infosys. The total investment in Infosys is almost Rs.44,960 Cr with 4.3% allocation in total equity oriented funds AUM.

4. Reliance Industries Ltd.

  • Reliance Industries Ltd (RIL) is a diversified conglomerate company. Equity mutual funds are having a consistent allocation in RIL.
  • Since last 2-3 years, allocations in RIL have seen a decent growth with the current holding of Rs.40,312.3 Cr by equity oriented funds. This allocation in RIL contributes around 3.9% of total AUM.
  • Reliance Industries stock is trading at a PE 19.31, which is higher than its 3 years, 5 years, 10 years average PE ratio. With the improved earnings visibility from Reliance Jio and Reliance Retail, RIL is enjoying a premium valuation. Jio and Retail both the businesses are going at fast pace and both can come with IPOs in coming years.
  • So, due to the very high free float of RIL and higher earnings visibility in future by the stock, equity funds are buying RIL and trying to increase the allocation of the stock in their portfolios.

5. Larsen & Toubro Ltd.

  • L&T is a construction and engineering conglomerate player. Mutual funds are invested around Rs.33,281.3 Cr in L&T stock. While the % allocation of L&T is around 3.2% of entire equity AUM.
  • L&T is a very good stock in terms of corporate governance, consolidated businesses growth(Financial Services, IT). L&T is delivering a consistent growth in its profits over the years. And therefore, it can be a good bet for the investors to hold the stock for their long-term portfolios.
Detailed Stock Analysis by Invest Yadnya
Detailed Stock Analysis by Invest Yadnya

6. State Bank of India

  • SBI is the biggest bank of India not by market capitalization but from business point of view in term of credit/loans given in the market. The investment in SBI is around Rs.33,066.2 Cr by mutual funds with 3.2% allocation in the stock out of total equity exposure by mutual funds.
  • Just like ICICI bank, SBI is one of the corporate banks with high earnings visibility. With the decrease in the provisioning (kept aside for NPAs from operating profits earlier), the profitability of the bank is increasing and will improve even more in coming quarters. So we can say that SBI is coming out and relieving from NPA pressure slowly.
  • The current profitability of all corporate banks, which is around Rs.4,000 Cr will grow to almost Rs.80,000 Cr by FY2020-21. So we can clearly get the growth trend for the stock in future and this is the

7. HDFC Ltd.

  • HDFC Ltd. is focusing on the housing demand in ‘Affordable Housing’ segment. It has a great opportunity in housing finance after the merger of Gruh Finance and Bandhan Bank.
  • The company is having a consistent growth potential to deliver the profit growth in coming years. So, Domestic Institutional Investors like mutual funds are very positive about HDFC Ltd. The current holding in HDFC Ltd is around Rs.31,521.9 Cr, with almost 3% allocation in the total equity AUM of mutual funds.

8. Axis Bank

  • Axis Bank comes under the corporate bank segment. Equity oriented mutual funds have invested around Rs.30,326.5 Cr in Axis Bank. The stock is having 2.9% allocation in entire equity AUM of mutual funds.
  • Just like other corporate banks ICICI Bank and SBI Bank, the earnings visibility of Axis Bank is improving in near future due to the reduced NPA pressure. And in the revival phase of corporate banks, we believe Axis bank is running ahead of ICICI Bank and SBI Bank. So it is a very good opportunity for mutual fund houses.

9. ITC Ltd.

  • ITC Ltd is a FMCG conglomerate company. The current holding of ITC Ltd is almost Rs.28,105.7 Cr, with the % allocation of 2.7% by the mutual funds of equity orientation.
  • The major contributors are the Index funds and Index ETFs in this allocation of 2.7% for the stock. Because of high free float of the stock, it is mandatory for the Index funds and Index ETFs to have the allocation for ITC Ltd. Moreover, ITC Ltd is having a good weightage in the Sensex and Nifty indices which is beneficial for the stock to increase its holdings by the index funds.

10. Kotak Mahindra Bank

  • Kotak Mahindra Bank is the one of the best banks in retail banking. It is a well-managed bank, with a great vision for future growths.
  • Mutual funds have made a investment of around Rs.59,465.4 Cr in Kotak Mahindra Bank. Thus, the bank is holding 2.3% share in total AUM of equity-oriented mutual funds. And this allocation have seen a consistent growth by the mutual funds.
  • As we all know, the promoters are required to reduce their holding as per the RBI’s regulations. So in this scenario, DIIs like mutual funds are very positive to increase their holding in Kotak bank once the free float will be available in the market.
4 things to note for mutual fund investors in volatile markets

Volatile Markets : 4 Things To Note For Mutual Fund Investors

Mutual Fund Investors Should Not Do These 4 Things in Current Volatile Markets Scenario


Indian stock market is currently going through a correction phase. In this article, we will discuss the 4 things to note for mutual fund investors in current volatile markets in order to generate higher returns.

Volatile Markets : 4 Things To Note For Mutual Fund Investors

Lets discuss the which are those 4 things to note for mutual fund investors in current volatile markets.

4 Things To Note For Mutual Fund Investors in Volatile Markets
Volatile Markets : 4 Things To Note For Mutual Fund Investors

1.Do Not Focus Too Much on Current Market Scenario

  • Indian stock market has entered a correction since last couple of weeks due to lack of measures in the budget 2019 to stimulate the economy. Also, taxation on the super rich has adversely affected the foreign investments and soured the market mood.
  • The Indian equity markets is going through a slow down due to both internal and external factors. Following are some of the factors/reasons behind the slowdown.
    1. Internal factors : NBFC crisis, Slowdown in auto sales, consumption and manufacturing
    2. External factors : US China trade, Brexit, uncertainty in crude oil prices, overall slowdown in global economic activity
  • Thus, you should not take your investment decisions in this kind of current scenario in the stock market. You should always remind yourself one important thing that you are investing in the stocks to achieve your long-term financial goals.
  • So, you should not focus on or worry too much for the short-term volatility and sentiment in the current market scenario.
BSE Sensex Falling Trend  (from 15th July 2019 to 9th August 2019)
BSE Sensex Falling Trend (from 15th July 2019 to 9th August 2019)
Source :

2.Do Not Stop Your SIPs

  • SIP route helps you average your purchase price and helps you with better returns with relatively lower risks. This rule applies for all Equity SIPs.
  • When market sentiments start becoming a bit panic or unshielded, most of the investors start worrying about their regular investments SIPs and raising a question on continuing their SIP investments. But, stopping your SIPs would not be a smart move.
  • The investors who would continue with the SIP investments during the market slump would gain by buying more units of the same fund. It helps them to buy stocks at a discount. Hence those investors who stick to their SIP investments would gain significantly through a lower average price of holdings.
  • So, you should not stop your SIPs in current market scenario in order to get the advantage of stock purchases at the discount.

3.Do Not Change Your Original Investment Allocation

  • Most of the investors tend to change their investments in times of market volatility. 
  • The BSE Sensex is trading lower compared to the 1-year-ago and 3-months-ago levels, while it is flat compared to its level 6 months ago.
    • In the past one year, small cap and mid cap funds have offered negative returns of almost -16% and -12%, respectively.
    • Thus, many investors tend switch to large cap funds to be safer if mid cap and small cap funds are not showing the expected performance. But that is not a right move.
  • Keep on altering the original investment allocation would affect your investments and can hamper your long-term returns.
  • Don’t think about changing allocations, moving to safer schemes etc. The best thing to do is to do nothing, in such uncertain, volatile market conditions. So, Stick to your asset allocation.
Mutual Fund Reviews By Invest Yadnya

4. Don’t Be Too Excited

  • Many smart investors make strategic allocations in a falling market to maximize wealth. Such tactical allocations will definitely helps you to buy more in a sluggish market.
  • An aggressive investor is prepared to take higher risk in anticipation of higher returns. Many times, you tend to go overloaded in the sentiment of becoming too excited in falling markets.
  • However, you should allocate your surplus funds to make strategic investments only after thinking it through. Allocate only the part you do not need in a short term.
  • Don’t be too excited for profit booking by going overloaded in sluggish markets. The market may not move as per your expectation and you might incur losses in the process.
Value Funds vs Multicap Funds

Value Funds Vs Multicap Funds

Comparative Analysis of Value vs Multicap Mutual Funds


In this article, we are going to do a comparative analysis of Value Funds Vs Multicap Funds, based on the parameters such as market capitalization, sector allocation, returns (calendar returns, trailing returns, rolling returns) and risk ratios etc.

Value Category : Value category funds follows value investing strategy for stock picking and it may or may not follow multicap approach for stock selection. Basically, value stocks are the stocks which are traded at relatively low price as compared to peers and they have low PE.

Multicap Category : Multicap category funds can invest across market capitalizations as there is no specific mandate as such but minimum 65% investment has to be equity. Multicap category mostly have growth oriented stocks. It can have value stocks as well.

Value Funds Vs Multicap Funds

In order to select between value fund and multicap fund, we have given comparison of category average in terms of market capitalization, sector allocation, returns – calendar, trailing, rolling and risk measures – alpha, beta, standard deviation and PE.

Following is the list of multicap and value funds which we have considered for comparison.

Value Funds Vs Multicap Funds
Value Funds Vs Multicap Funds

Market Capitalization

Value Vs Multicap Funds : Market Capitalization
Market Capitalization

Both the categories have almost same allocation in midcap and cash, difference is in allocation in large and small cap. Multicap category has higher allocation in large cap and lower in small cap as compared to value category. Value category’s high allocation in small cap is due to the approach it follows. Multicap category is more inclined towards large cap. Value category funds are more aggressive from that perspective. They have more mid and small cap allocation as compared to multicap.

Sector Allocation

Value Vs Multicap Funds :Sector Allocation
Sector Allocation

It is interesting to know that both the categories are very bullish on financial sector. Multicap has significantly increased its allocation in financial sector from 24% to 34% in last 5 years. Value category has also significantly increased its financial sector allocation. There is slight or no change in allocation in construction and FMCG sector. Value category has increased its allocation in energy sector while multicap has decreased and both have decreased in technology sector. Overall, there is not much difference in sector allocation.


Types of mutual fund returns is as follows :

Calendar Returns

  Value Vs Multicap Funds : Calendar Returns
Value Vs Multicap Funds : Calendar Returns

Calendar returns are nothing but the absolute returns calculated from 1st Jan to 31st Dec.  It shows if the fund is able to contain losses better than the index. There is not much difference between calendar year returns of multicap and value category in most of the years. Till 2016, both the categories have beaten benchmark. In 2017, Multicap category was beaten by both value category as well as benchmark. In last 11 years, 2018 was the worst year for both categories. Overall, they have performed consistently and very similarly.

Trailing Returns

 Value Vs Multicap Funds : Trailing Returns
Value Vs Multicap Funds : Trailing Returns

In last 1 year, multicap category has done much better than the value category because of more allocation in large cap. Value category could not perform well because of its aggressive investment across market capitalizations. Small  and mid-cap space has not done well in last one year. In 3, 5 and 10 years, there is hardly any difference from the returns perspective. Both have outperformed the benchmark in long term.

Rolling Returns

  Value Vs Multicap Funds : Rolling Returns
Value Vs Multicap Funds : Rolling Returns

Rolling returns of the fund show consistency of fund’s performance. Again, there is not much difference in rolling returns. Value category returns are slightly better than multicap.

Risk Ratios

 Value Vs Multicap Funds : Risk Ratios
Risk Ratios

From the value of standard deviation and beta, we can see that there is no difference in risk profile. Both the categories take similar risk . Beta of less than 1 indicated that both are less volatile than the market. Alpha of multicap category is more because of greater allocation in large cap stocks. Value category has lower PE as expected. PE of benchmark is between that of multicap and value.


  • Currently, very little difference between value and multicap category in terms of risk and returns. One reason could be that many of the value funds currently do not follow pure play value strategy.
  • Even some multicap funds can have or do have value strategy. So, when planning to buy a multicap fund, you should consider both multicap and value category.

Mutual Fund Returns

Types of Mutual Fund Returns – Trailing, Calendar, Rolling & SIP

Ways To Measure The Mutual Fund Performance?


There is a lot of confusion in investors over which Returns are more appropriate to evaluate the returns earned by the mutual fund investment. In this article we have discussed the appropriate types of mutual fund returns and how they are used.

Performance of Mutual Funds :Types of Mutual Fund Returns

The returns on any investment is measured as the total of its capital appreciation over time and any other income generated divided by the initial amount of investment. This simple calculation is termed as Total Returns. We have reviewed our funds returns through 4 different parameters, namely:

  1. Trailing Returns
  2. Calendar Returns
  3. Rolling Returns
  4. SIP Returns
Types of Mutual Fund Returns
Types of Mutual Fund Returns

1.Trailing Returns

  • Trailing returns are the most popular measure to assess performance of your Fund in the past. They are point-to-point returns. Trailing returns look backwards from a specific date for a funds annualized returns over a specific period of time.
  • Trailing Returns are defined in 2 categories : 1.Regular and 2.Direct
  • These returns are calculated for 1/3/5/10 years for Regular category and 1/3/5 years for Direct category. The backward point from which Trailing returns are calculated is usually from the latest NAV available.
  • For Example, returns are calculated from a specific date of the most recent year say 31-Jan-2019 to any past date say 31-Jan-2018 (1 year trailing return), 31-Jan-2016 (3 year), 31-Jan-2014 (5 year), 31-Jan-2009 (10 year) etc.
Trailing Returns

Above graph shows the Trailing Returns for Aditya Birla SunLife Frontline Equity fund as compared to the Benchmark and Large cap funds Category. It shows if the fund has overperformed or underperformed when compared to its benchmark and category.

2.Calendar Returns

  • Calendar Returns are nothing but absolute returns. E.g. 1st January to 31st December of each Calendar year. Calendar returns tells us how a fund performs in Market Rises and Market falls in various years. It shows if the fund is able to contain the losses better than the Index it follows and how good returns a fund can generate in the market rallies.
  • Calendar Returns are calculated for last 10 years starting from 2008. NAV as on last working day of the year is considered for calculating the returns.
  • Returns are calculated from last working day of Dec month of the immediately preceding year to the last working day of Dec month of the year under consideration.
  • For Example, period to calculate returns for 2017 is 30-Dec-2016 to 29-Dec-2017
Calendar Year Returns
Calendar Year Returns

Above graph shows the Calendar Returns for Aditya Birla SunLife Frontline Equity fund as compared to the Benchmark and Large cap funds Category. It shows if the fund has overperformed or underperformed when compared to its benchmark and category.

3.Rolling Returns

  • Rolling returns give a picture of how a fund’s returns have improved constantly and not just over the latest month or quarter-end. Thus, Rolling Return of a fund is the indicator of the consistency in the performance improvement of that fund. So, rolling return is considered to be a more reliable parameter in the mutual fund performance analysis.
  • It shows that you made equivalent return of an average amount in a year in last X years period. In this return all the extreme highs and lows are included from a period of last X years showing you the minimum and maximum returns that you may earn.
  • Rolling returns is a type of annualized return. Rolling returns calculate CAGR in an overlapping fashion. i.e. the average annualized returns are taken for a period on every day/week/month and are taken till the last day of the period.
Calculation of Rolling Return
  • Let us say we have to calculate 3 year rolling return for the period from 2008 to 2018. Then, we will start calculating performance from 1st Jan 2008 to 1st Jan 2011. Next analysis will be from 2nd Jan 2008 to 2nd Jan 2011 and so on till the latest data. This is how daily rolling returns are calculated for 3 years time period.
  • Similarly, 5 year rolling return will be calculated from 1st Jan 2008 till 1st Jan 2013. The total period in consideration for required data for Yadnya’s analysis is 10 years (2008-2018). In our analysis, we use monthly rolling returns (not daily rolling returns)
Rolling Return Calcualtion
Rolling Return Calcualtion
  • The Probability is calculated using mean and standard deviation. Standard deviation is a measure of how much returns can deviate from the average return.
  • In our analysis for rolling return calculation we rolled on monthly basis for last 3/5/7 years. We are comparing rolling return of fund with its rolling standard deviation. And this standard deviation is computed from monthly return and then annualized.
  • Here we can take an example of a fund’s rolling return comparison in last 3/5/7 years.
Rolling Returns
Rolling Returns
  • For Example, We can recognize that in ABSL Frontline Equity Fund gave lowest return of 11.5% and highest return was 20.8% in 7 years Rolling returns. And the probable low return is 12.4% and probable high return is 16.2%.Rolling return performance of the fund is consistently above category average in all observation periods – 3, 5 & 7 for both lowest & highest returns.
  1. Mean – standard deviation = probable low return
  2. Mean + standard deviation = probable highest return
  • Our rolling return analysis also shows that how in shorter duration ( 3 years), you may incur low or negative returns depending on time period but as the duration of rolling return increases (5/7 years), likelihood of low returns also reduces significantly.
  • In above example, lowest return of the Large cap category average is -0.6% in 3 years whereas it is 9.0% in 5 years which shows the whole category has never given less than 9.0% return if the investor has invested for 5 or more years.

4.SIP Returns

  • Systematic Investment Plan is a mode of regular investments in mutual funds. SIP allows you to invest a certain pre-determined amount at a regular interval (weekly, monthly, quarterly, etc).
  • A SIP is a planned approach towards investments and helps you inculcate the habit of saving and building wealth for the future.
  • You are allocated certain number of units based on the ongoing market rate (called NAV or net asset value) for the day. Every time you invest money, additional units of the scheme are purchased at the market rate and added to your account. Hence, units are bought at different rates and investors benefit from Rupee-Cost Averaging and the Power of Compounding.
Process of SIP Calculation- How to Calculate SIP Returns?

For the detailed process of SIP Calculation, Refer our article: What is Systematic Investment Plan [SIP]?

Example : SIP Performance of Aditya Birla Sun Life Frontline Equity Fund

SIP returns of the Aditya Birla Sun Life Frontline Equity fund is below average and benchmark in 1 & 3 years and near average in long term.


What Is Dividend for Mutual Fund?

Mutual Fund Dividend Explained with Example


In this article, we will discuss what is dividend for Mutual Fund. The mutual fund houses profit includes both dividends received from companies and profit which they earn from improving markets. Mutual Fund hounses distribute this profit to their unit holders.

Meaning of Dividend for Mutual FUnds

  • Meaning of dividend is different in stocks and Mutual Funds.
  • In stocks, dividend is a portion of company’s earnings which is paid to shareholders whereas in Mutual Funds, dividend is the gains of the fund scheme which is distributed to the investor.
  • Mutual Fund dividend doesn’t just mean the stock dividend they have got from their investment, it can also be given from capital gain which they have earned on their investments.
  • Frequency of paying dividend depends upon fund, it may be anytime during the year. They are no set frequency; Equity funds may not give any dividend in a year or give multiple times.
What is Dividend for Mutual Fund?
What Is Dividend for Mutual Fund?

Types of Options in Mutual FUnds

Mostly large cap companies are more mature, so they tend to distribute their profit as dividend. But in case of small cap companies, they need to invest most of their profit in their growth that’s why their dividend is uncertain.

There are two type of option is available in mutual fund scheme for investor; –

A. Growth option – In this option investor will not received any dividend from fund. Dividend amount that received by fund from companies in which they invested, is reinvest in his portfolio. This reinvestment money directly increases the NAV (Net Asset Value) of growth option we don’t get regular income but whenever we sale our investment it realize higher return than compare to dividend option.

B. Dividend Option – In this option investor receives dividend from mutual fund. There are two type of option available.

i. Dividend Option – Under this option, the Mutual Fund Company declares Dividend and directly credits that dividend to the bank account of the Unit holder.

ii. Dividend Reinvestment option – Under this option, Dividend declared by the Mutual Fund Company is not credited to Bank Account, but it is reinvested in the respective Mutual Fund Scheme itself. Simply speaking, Fund houses purchase Additional Units from the amount of dividend received.

Example : Dividend Option of Mutual FUnd

For the analysis we are taking dividend option. We calculate dividends distributed by the fund as a % of NAV. And For calculation of dividend as a % of NAV we use the NAV as on the record date. Dividend distributed of fund is compare with its category average from inception of fund.

In this example, we have compared dividends distributed by Aditya Birla Sun Life Frontline Equity Fund with dividends distributed by Large Cap Category Average from its inception year. For detailed analysis of fund, Refer :

%d bloggers like this: