Gaurav Seth
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isVerifiedExpertAuthor is a Zfunds Verified Expert
Gaurav Seth


Mutual funds holdings are the various securities stocks and bonds held within a mutual fund. When you buy shares in a mutual fund, your shares are allocated proportionally to the various securities held by the fund. Before making important purchases such as a car, a house or any such, you will need to take a look inside. You should do the same whenever you are looking at investments. Learn about mutual funds holdings and the reason for their importance to be considered while investing in a fund. 


A mutual fund is an investment alternative which pools money from different investors to purchase securities. A mutual funds holding represents the funds and securities it is holding. All of the underlying assets or holdings combine to form a single mutual fund. 

For instance, HDFC Sensex Index Fund is a mutual fund that holds stocks that mirrors Sensex. The Sensex generally lists 30 stocks but the index fund may hold 31 or 32 stocks representing many different types of sectors. The stocks held by any mutual funds are referred to as its holdings. 


The fund’s management creates an investing strategy and sets goals and purchases stocks that best meet the overall investment plan for the mutual fund. Because the stocks held by a mutual fund can be very expensive when it comes to price, the holdings are fractionalised to make them more affordable to individual and retail investors. Investors buy these fractionalised holdings which are called units and trust the management to invest their money according to the growth of the fund. 


Mutual funds holding are significant because they are what dictates the performance of the fund and whether it matches the goals and interest. There are other factors that are important for investors as well. 

1. Exposure:

Mutual funds give you a broader exposure to markets, sectors and stocks that you may not be able to gain access to if you were to try and copy an index fund yourself - again, because it will be too expensive. It would also take most of the time to manage the portfolio to ensure that it performs at the level investors want it to. 

2. Lower costs:

One of the most important advantages of mutual funds is the number of holdings. Even at the lowest price of some stocks, investors still have to pay a lot. To hold one share of each company that a mutual fund holds stocks in, you would likely need hundreds of thousands of rupees. 

You will pay fees for mutual funds, because they are managed for you, but overall the costs can be low if you choose a passively managed fund. These funds usually have low fees when compared to the actively managed funds which are taken more care of by fund managers. 

3. Choosing funds:

When you are comparing mutual funds, it is important that you look over the holdings, you could be trying to opt between well performing funds from different AMC but you might decide to invest in two identical mutual funds with similar holdings if you are not cautious. 

Mutual fund holdings can be the same across different funds, but if you invest in 2 funds that mimic the same index or have similar holdings, you increase the risk you are taking on. If the stock market begins to go down, both of your funds will lose value at the same rate. That will act to double up the losses but again, if the stock market and indexes begin to go up, your profits can double up because of the same. 

4. Diversification:

Alongside the above points is diversification, one of the most common recommendations for reducing the overall risk of the portfolio. Because you gain exposure to several markets and sectors, the holdings in a mutual fund work to reduce the risk of market and price volatility by countering stocks with fluctuating prices with more stable securities. 

This diversity does not eliminate the risk but it helps to preserve capital in case economic and market scenarios cause drastic fluctuations in prices. Not all sectors respond in the same way to price influencing factors, so diversity across sectors using different market capitalisation balances out your portfolio.