Portfolio Composition

% Debt Holding

A pretty straightforward metric that represents the portion of the portfolio invested into debt assets.

% Equity Holding

A pretty straightforward metric that represents the portion of the portfolio invested into equity assets.

% Cash holding

This represents the portion of the portfolio invested into cash to either handle redemptions or to park the funds temporarily before a longer term allocation can be decided.

Your friend’s AMC has a hybrid strategy : a balanced advantage fund that as of 31st March 2021 is invested into 60% Equity & 40% debt. Then %Debt holding would be 40% & % Equity holding would be 60%

These are both dynamic factors and will change on a monthly basis either because of re-balancing or simply because of the fact that the equity portfolio will be more volatile than the debt portion.

% Large Cap Holding

Portion of the portfolio invested into large cap stocks

% Mid Cap Holding

Portion of the portfolio invested into mid cap stocks

% Small Cap Holding

Portion of the portfolio invested into small cap stocks

% Other Holding

Portion of the portfolio invested into stocks that cannot be categorized as large, mid or small caps

There are different categories of funds : Large caps, Mid caps, Small caps and at any given point a small cap fund is never generally invested into 100% small cap stocks. It has some portion of the portfolio allocated to mid caps or large caps or both.

For eg : your friend’s mid cap fund might have 70% mid cap holdings and 30% small cap holdings. We can use these filters to check which funds are staying true to their stated strategy and what allocation is being made to different market cap stocks.

% Concentration : Top 3 holdings

This metric represents the % portfolio made up by the top 3 holdings.

% Concentration : Top 5 holdings

This metric represents the % portfolio made up by the top 5 holdings.

% Concentration : Top 10 holdings

This metric represents the % portfolio made up by the top 10 holdings.

These metrics are a measure of concentration or diversification available in the strategy. Funds like sectoral funds & focused funds would have high concentration as compared to their counterparts.

For eg : In many popular focused funds, the entire portfolio is made up of 20-25 stocks where the top 10 make up for around 70% of the portfolio.

Investors who prefer a more diversified approach can use these filters to identify the concentrated portfolios available & filter them out.

% A rated bonds

A metric relevant for debt mutual funds, This represents the portion of the portfolio invested into good credit quality bonds that include the following ratings : AAA, AA+, AA, AA-, A+,A,A-,A1-A4.

% B rated bonds

A metric relevant for debt mutual funds, This represents the portion of the portfolio invested into low credit quality bonds that include the following ratings : BBB, BB+, BB, BB-, B+,B,B-.

% Poorly rated bonds

A metric relevant for debt mutual funds, This represents the portion of the portfolio invested into poor credit quality bonds that include the following ratings : C & D.

Debt mutual funds are a collection of several individual bonds/securities, each with its own credit quality & other unique features.

High credit quality bonds are safer but provide a lower yield (YTM). These should be preferred by investors who are looking for the least possible credit risk.

Low credit quality bonds have higher credit risk involved but offer a higher yield than bonds with better ratings, These are preferred by investors who are fine with taking additional risk for the additional yield.

% Sovereign bond holdings

A metric relevant for debt mutual funds, This represents the portion of the portfolio invested into debt issued by the government of India and is guaranteed by the government itself thus essentially carrying no credit risk. Credit risk implies a default of the issuer, i.e The inability of the borrower to pay back the borrowed amount.

% Corporate bond holdings

A metric relevant for debt mutual funds, This represents the portion of the portfolio invested into debt issued by private companies and its credit quality depends on the financials of the company issuing it, it is not backed by the government of the country. It can range from AAA rated to C/D rated assets. 

Investors can use these metrics to find out strategies that match their investment needs the best. An investor that prefers bonds with the least credit risk would prefer funds with higher allocation to sovereign debt.