Where Do Institutions Invest?

A recent report by Kotak Institutional Equities observes that almost 70{fa12a1ddfd2e9511e425ffa82d03ff10cf8f6b496ca27868adfa8056076e54a2} of the portfolio of mutual funds and more than 70{fa12a1ddfd2e9511e425ffa82d03ff10cf8f6b496ca27868adfa8056076e54a2} of portfolios of other financial institutions like banks and insurance companies is invested in just 40 listed companies.

This information seems to agree with our analysis of the holdings of the top equity mutual funds of India, which shows that 80-90{fa12a1ddfd2e9511e425ffa82d03ff10cf8f6b496ca27868adfa8056076e54a2} of the assets under management (AuM) of the top equity mutual funds is allocated to large- and mid-cap companies.

There are 5000+ listed companies in India, and only 250 companies are considered large- or mid-cap. Everything else is defined as small-cap.

This means that there are many other listed companies that do not attract as much capital or attention and could be better vehicles for capital growth for smaller pools of capital – an advantage for an individual investor investing relatively small amounts of money.

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