Why Mutual Funds Love The Next 500

A Lowdown On The Emerging Companies That Are The Absolute Favourite Of Equity Mutual Funds.

- Avneet Kaur

LARGE-CAP MUTUAL FUNDS delivered 26% returns in 2021. In comparison, small-cap funds returned close to 60%. The divergence was partly a result of market shifting focus towards finding hidden gems, stocks not as prominent as large-caps but where potential returns are high. Numbers bear this out. Small-cap schemes have invested a whopping ₹26,648 crore in Fortune India Next 500 stocks. In fact, Next 500 stocks account for one-fourth of their combined portfolio. Overall, open-ended equity mutual funds have invested ₹86,349 crore, or 6.5% of their assets under management (AUM), in these stocks. Equity schemes include large-cap, large- & mid-cap, mid-cap, multi-cap, small-cap, dividend yield, value/contra, focused, sectoral/thematic, ELSS and flexi-cap funds. Multi-cap and mid-cap schemes hold 10% and 9% assets. Let’s dig into stocks that are favourites of mutual funds.

₹86,349 CRORE Total investment by open-ended equity funds in Next 500 stocks.

High Stakes

Sona BLW Precision Forgings, which has a market capitalisation of ₹37,800 crore, is the most sought-after stock in mutual fund universe. It had debuted on exchanges in June last year. Prominent schemes with exposure to the auto components manufacturer are Axis Long Term Equity Fund, the largest tax-saving fund with ₹33,800 crore assets, Mirae Asset Emerging Bluechip, the biggest scheme in large& mid-cap category with ₹22,000 crore assets and SBI Bluechip Fund, the second-largest fund in large-cap category. As on December 31, 2021, the top three mutual fund stakeholders were Axis Mutual Fund, which held slightly over 4% stake in the company, followed by SBI Mutual Fund (3.12%) and Mirae Asset Mutual Fund (2.3%), shows data by Value Research.