All goods and services we purchase have a cost involved. Likewise, for the investments we make for our financial well-being, there is a real cost of investing attached; there aren’t any free lunches.

As an investor, you cannot afford to ignore the cost of investing as it weighs down on your returns as well.

What is Expense Ratio in Mutual Funds?

A mutual fund house has several costs involved such as investment management fees, brokerage on buying and selling securities, registrar & transfer fees, custodian fees, legal fees, audit fees, sales & marketing /advertising expenses, administrative expenses, and so on. These costs are encapsulated into a Total Expense Ratio (TER), which is charged or levied on you, the investor.

Different categories and sub-categories of funds have dissimilar expense ratios. Plus, within the respective sub-category, the expense ratio varies among the peers.

As a prudent investor, you should consider mutual fund schemes with competitive expense ratios (so that your cost of investing is low) and the potential to earn decent returns improves.

The TER is charged to the Net Asset Value (NAV) of the mutual fund scheme. It is expressed as an annualised percentage of the fund’s net assets and the daily NAV of a mutual fund scheme is disclosed after accounting for the expenses. As an investor, you do not pay for expenses ratio separately. The lower the TER of the mutual funds, the higher its NAV.

How is the Total Expense Ratio or TER calculated?

The formula used to calculate TER is as follows:

Total Expense Ratio (TER) = (Total Expense of the Scheme during the period / Total Scheme Assets) x 100

At present, it’s important to note that TER is fungible. Meaning, there is no limit on any particular type of allowed expense as long as the total expense ratio is within the prescribed limit. The limits as prescribed by the capital market regulator, SEBI, currently are as under:

Table 1: TER limits for actively managed equity and debt schemes

Asset Under Management	Maximum TER as a percentage of daily net assets
	TER for Equity funds	TER for Debt funds
On the first Rs. 500 crores	2.25%	2.00%
On the next Rs. 250 crores	2.00%	1.75%
On the next Rs. 1,250 crores	1.75%	1.50%
On the next Rs. 3,000 crores	1.60%	1.35%
On the next Rs. 5,000 crores	1.50%	1.25%
On the next Rs. 40,000 crores	Total expense ratio reduction of 0.05% for every increase of Rs.5,000 crores of daily net assets or part thereof.	Total expense ratio reduction of 0.05% for every increase of Rs.5,000 crores of daily net assets or part thereof.
Above Rs. 50,000 crores	1.05%	0.80%

(Source: www.sebi.gov.in) 

In the case of passive mutual funds, viz. Index Funds and ETFs, plus for Fund of Funds (FoFs) and close-ended mutual funds, the TER are different, as under:

Table 2: TER limits for passive funds, close-ended funds and others

Type of Scheme	Maximum TER (%)
Equity-oriented close-ended or interval schemes	1.25%
Non-equity-oriented close-ended or interval schemes	1%
Index Funds/Exchange Traded Funds (ETFs)	1%
Fund of Funds investing in actively managed equity-oriented schemes	2.25%
Fund of Funds investing in actively managed non-equity-oriented schemes	2%
Fund of Funds investing in liquid index funds and ETFs	1%

(Source: www.sebi.gov.in) 

Last year, finding flaws and inconsistencies such as “splitting of transactions”, “churning of investments”, and “the way incentives were calculated”, the SEBI, in a letter to the Association of Mutual Funds in India (AMFI), disallowed fund houses from levying additional expense ratios from B30 cities.

In May 2023, working in the interest of investors, SEBI released a Consultation Paper on Expense Ratio, proposing to overhaul the Expense Ratio structure of mutual funds.

Among the many proposals, the regulator recommended that the TER be charged at the fund house or AMC level and not at the scheme level.

Moreover, the TER must be inclusive of all costs and expenses, including GST on management fees, brokerage and transaction costs, B-30 incentives, etc.

For Hybrid mutual fund schemes, the regulator cited that their TER shall be the weighted average of TER of equity & equity-related instruments and TER of other than equity & equity-related instruments.

[Read: How SEBI is Planning to Overhaul the Expense Ratio for Mutual Fund Investments]

Besides, the regulator floated the idea of a performance-linked expense ratio taking cognisance of the underperformance of many actively managed mutual funds.

[Read: SEBI Proposes Two Approaches to Performance-linked Expense Ratio for Mutual Funds]

You see, TER cannot be the sole deciding factor to invest in mutual funds…

The expense ratio is just one of the many parameters that go into selecting winning mutual funds. To know other crucial factors in choosing the best mutual funds, watch this video:

Keep in mind that while a high Expense Ratio may weigh down on the mutual fund scheme’s performance, it is also not necessary that a mutual fund scheme with a low expense ratio is always better.

So, don’t invest in any mutual fund scheme just because its expense ratio is low. In isolation, TER can never be the deciding factor. You see, a poorly managed scheme can have the lowest expense ratio, and it’s also possible that the best-managed scheme with a consistent performance record may have the highest expense ratio.

Therefore, a low expense ratio cannot be a superseding factor when it comes to mutual fund scheme selection. If the expense ratio is low, and if the scheme is efficiently managed, it may enhance the overall performance.

Thus, if the mutual fund scheme is compensating well, i.e. generating respectable returns against the risk exposure (by holding a robust portfolio by following sound investment processes and systems), then the expense ratio is well justified.

Usually, mutual fund schemes with large Assets Under Management (AUM) enjoy economies of scale, and thus their expense ratios are expected to be lower. But that doesn’t mean you should invest only in schemes with large AUM. This is because, it is often found that larger schemes, especially the ones investing in mid-caps and small-caps, become less nimble with growing AUM.

[Read: Stress Test – What Is the Capacity and Liquidity of Your Small Cap Fund]

Under the current challenging market conditions, it is important to choose a mutual fund scheme that justifies the expense ratio with an appealing long-term performance backed by robust investment processes and systems.

We analysed the performance of 500+ actively managed equity mutual funds and found that the average difference between the expense ratios of Direct Plans and Regular Plans was 1.17%-which is substantial.

While that difference in the expense ratio may not seem much at the face of it, over a sufficiently long investment horizon it does make a difference in the returns (owing to the difference in the expense ratio of the Direct Plan and Regular Plan.

Say, the difference is as small as 0.5% between these two plans, you invested Rs 10 lakh, assuming it clocked a 12% compounded annualised return, and you stayed invested for 30 years; the value of it under the Direct Plan would be Rs 2.99 crore as against Rs 2.62 crore under the Regular Plan. That’s the difference it makes in the power of compounding.

[Read: Direct vs Regular Plan – How Expense Ratio Make Significant Difference to Your Mutual Fund Returns?]

So, investing in Direct Plans of mutual fund schemes is the best way to keep costs low without compromising on potential gains.

However, if you lack the expertise and/or time required to select the right mutual funds and monitor the portfolio and other investment decisions, you can seek the assistance of an intermediary.

Here are schemes with low expense ratios from the various sub-categories of equity mutual funds: thematic opportunities, multi-cap, mid-cap, and small-cap.

Table 3: Schemes with low expense ratios

Scheme Name	Expense Ratio		AUM (Rs crore)
	Direct plan	Regular Plan
Franklin India Opportunities Fund	0.37	1.89	3,460
Mahindra Manulife Multi Cap Fund	0.37	1.86	3,478
Kotak Emerging Equity Fund	0.38	1.47	42,699
Edelweiss Mid Cap Fund	0.43	1.80	5,534
Kotak Small Cap Fund	0.46	1.66	14,815

Data as of May 15, 2024
(Source: ACE MF, data collated by PersonalFN Research) 

Performance of the same set of schemes across timeframes and on a risk-adjusted basis helped us pick winners.

Table 4: Some of the best-performing diversified equity mutual fund schemes with low expense ratios

Scheme Name	Absolute Returns (%)		CAGR (%)				Risk-Ratios
	6 mths	1 Yr	3 Yrs	5 Yrs	7 Yrs	10 Yrs	Std. Dev	Sharpe	Sortino
Kotak Small Cap Fund	16.15	28.80	33.90	17.49	19.65	23.24	15.12	0.35	0.73
Edelweiss Mid Cap Fund	25.04	34.34	27.94	15.80	18.61	22.93	15.76	0.38	0.80
Mahindra Manulife Multi Cap Fund	23.56	33.80	27.15	19.13	19.60	–	16.35	0.36	0.71
Kotak Emerging Equity Fund	17.33	28.62	26.97	16.39	19.30	23.30	13.75	0.37	0.74
Franklin India Opportunities Fund	32.04	46.50	21.95	12.26	13.98	17.64	16.66	0.39	0.73
NIFTY 500 – TRI	18.42	23.79	19.45	12.42	13.46	12.78	14.38	0.28	0.57
Nifty Midcap 150 – TRI	24.63	38.28	26.07	14.60	17.07	14.37	16.67	0.36	0.74
Nifty Smallcap 250 – TRI	27.95	42.63	27.21	10.36	13.62	11.92	19.56	0.34	0.64

Data as of May 15, 2024
The list of funds cited here is not exhaustive.
*Please note, this table only represents the best-performing schemes based solely on past 3-year returns, Sortino, and low Expense Ratio.
Returns expressed are rolling returns in %. calculated using the Direct Plan-Growth option.
Standard Deviation indicates Total Risk and Sharpe Ratio measures the Risk-Adjusted Return. They are calculated over 3 years assuming a risk-free rate of 6% p.a.
*Please note, that this table represents past performance. Past performance is not an indicator of future returns.
The securities quoted are for illustration only and are not recommendatory.
Speak to your investment advisor for further assistance before investing.
Mutual Fund investments are subject to market risks. Read all scheme-related documents carefully.
(Source: ACE MF, data collated by PersonalFN Research) 

The integrated view of Table 2 and Table 3 reinforces our belief: AUM, expense ratio and scheme performance are less strictly co-related.

Let’s look at mutual fund schemes in the table above individually.

Equity Mutual Fund Scheme #1: Kotak Small Cap Fund

Launched in February 2005, originally as a mid-cap fund, this scheme was repositioned and renamed Kotak Small Cap Fund in June 2018 to align with SEBI’s mutual fund categorisation norms. The fund now holds a small-cap-biased portfolio.

Kotak Small Cap Fund (KSCF) aims to generate capital appreciation from a diversified portfolio of equity and equity-related securities by investing predominantly in small-cap companies.

The fund prefers to invest in companies which meet the following criteria:

• Proven products and services
• Record of above-average earnings growth and have the potential to sustain such growth
• Stock prices that appear to undervalue their growth prospects
• Companies, which are in their early and more dynamic stage of the life cycle, but are no longer considered new or emerging.

While shortlisting stocks for the portfolio, Kotak Small Cap Fund has criteria such as promoter integrity & capability, ability to generate cash flow, whether it has seen market cycles, simple business model, business quality, and low leverage.

Currently, per the April 2024 portfolio, KSCF holds 76 stocks in its portfolio. By and large, KSCF has held 75 to 80 stocks in its portfolio in the last year and followed its mandate of being a small-cap fund. Only around 16% to 24% has been allocated to mid-cap companies in the last one year and the rest to large-caps. Even amid elevated valuations of the Indian equity markets, especially small-caps, KSCF hasn’t kept more than 5% in cash-and-cash equivalents.

Table 5: Top-10 holdings of Kotak Small Fund

Holdings	Sector	% of assets
Cyient Ltd.	IT	3.67
Carborundum Universal Ltd.	Abrasives	3.34
Blue Star Ltd.	Consumer Durables	3.30
Ratnamani Metals & Tubes Ltd.	Iron & Steel	2.83
Century Plyboards (India) Ltd.	Construction Materials	2.73
Techno Electric & Engineering Company Ltd.	Infrastructure	2.55
Exide Industries Ltd.	Automobile & Ancillaries	2.32
Alembic Pharmaceuticals Ltd.	Healthcare	2.32
Galaxy Surfactants Ltd.	FMCG	2.21
The Great Eastern Shipping Company Ltd.	Logistics	2.10

Data as of April 28, 2024
(Source: ACE MF, data collated by PersonalFN Research) 

The latest portfolio of KSCF of April 2024 is well-diversified with top-10 stock exposure, not more than 27.38%. Similarly, there is diverse exposure to sectors. The top 5 sectors include engineering, pharma, auto ancillaries, and consumer durables comprising 15.87% of the portfolio.

The current Price-to-Equity (PE) ratio is about 48.3X, while the Price-to-Book Value (PBv) ratio 7.3x. Perhaps taking cognisance of this and citing market concerns, Kotak Mutual Fund has restricted investments in KSCF aimed at safeguarding the interests of current unitholders and ensuring that incremental investments are made appropriately due to the recent significant surge in small-caps.

KSCF follows a buy-and-hold strategy to derive the full potential of the stocks. Thus, its portfolio turnover ratio is also low amongst its peers.

To know more about Kotak Small Cap Fund, read its factsheet here.

Equity Mutual Fund Scheme #2: Edelweiss Mid Cap Fund

Launched in, December 2007 as a mid and small-cap fund, this scheme was repositioned and renamed as Edelweiss Mid Cap Fund (EMCF) with effect from March 2018 to align with SEBI’s mutual fund categorisation norms. The fund now mainly follows a small-cap-biased portfolio.

The investment objective of EMCF is to seek to generate long-term capital appreciation from a portfolio that predominantly invests in equity and equity-related securities of mid-cap companies. However, there can be no assurance that the investment objective of the Scheme will be realised.

EMCF aims to invest in mid-cap companies for the long term. The fund identifies:

• Companies with strong growth potential
• Companies with a special product which has a particular market niche and therefore good earnings potential
• Companies undertaking corporate restructuring

The investment approach is bottom-up stock picking — wherein investments are selected primarily based on specific criteria relevant to the company in question rather than general macroeconomic considerations. Moreover, there is no bias towards any particular sector.

Currently, per the April 2024 portfolio, ECMF has 71 stocks in its portfolio. Its holdings are the last one year have been in the range of 50 to 70 stocks mainly from the mid-cap domain. Only around 13% to 17% of its portfolio has been allocated to small-cap companies in the last one year, while large-caps have ranged from 11% to 18%. Currently, ECMF holds less than 1% in cash-and-cash equivalents compared to 4.5% in April last year.

Table 6: Top-10 holdings of Edelweiss Mid Cap Fund

Holdings	Sector	% of assets
Trent Ltd.	Retailing	3.86
Power Finance Corporation Ltd.	Finance	3.68
Dixon Technologies (India) Ltd.	Consumer Durables	3.63
Persistent Systems Ltd.	IT	3.48
Indian Bank	Bank	3.27
JSW Energy Ltd.	Power	3.10
Voltas Ltd.	Consumer Durables	3.08
Cummins India Ltd.	Automobile & Ancillaries	3.06
The Federal Bank Ltd.	Bank	2.83
Solar Industries India Ltd.	Chemicals	2.75

Data as of April 30, 2024
(Source: ACE MF, data collated by PersonalFN Research ) 

The latest portfolio of ECMF of April 2024 is well-diversified with top-10 stock exposure, not more than 32.74%. The fund has exposure to an array of sectors such as retail, banking & finance, consumer durables, IT, auto, and so on. However, the top 5 sector exposure of EMCF is 49.16%, which shows high conviction for certain sectors.

The current Price-to-Equity (PE) ratio of ECMF is about 58.1x, while the Price-to-Book Value (PBv) ratio is 10.1x. Nonetheless, the Scheme endeavours to remain fully invested in equity and equity-related instruments at all times. The strategy is to identify companies early or which have the potential to scale up significantly to become materially larger in the medium to long term. For this reason, ECMF’s portfolio turnover ratio is less than 1 time, even as valuations in mid-caps and small-caps seem stretched. The fund takes exposure to various derivatives instruments hedging purposes, portfolio balancing, and optimising returns.

To know more about Edelweiss Mid Cap Fund, read its factsheet here.

Equity Mutual Fund Scheme #3: Mahindra Manulife Multi Cap Fund

Launched in May 2017, Mahindra Manulife Multi Cap Fund (MMMCF) aims to create a well-diversified portfolio of companies across market cap segments, i.e. multi-cap and various sectors with a long-term perspective.

Multi-cap funds, as you may know, have to maintain a minimum exposure of 25% in each market cap, regardless of the market conditions.

The investment objective of MMMCF is to provide medium to long-term capital appreciation through appropriate diversification and taking a low risk on business quality. The diversified portfolio would predominantly consist of equity and equity-related securities including derivatives. However, there can be no assurance that the investment objective of the Scheme will be achieved.

While following an active style, MMMCF focuses on creating an appropriately diversified portfolio of companies with a long-term perspective. The Scheme follows a top-down approach to select sectors and a bottom-up approach to picking stocks across the sectors based on the quality of the business model and quality of management. The quality of the business model and quality of management will be assessed by:

• Profitable & profitable growth in good or bad cycles
• Optimum utilization of capital
• The leadership shown in the industry in which they operate
• Track record of consistent and long-term execution potential

By deploying a holistic risk management strategy endeavour to manage risks associated with investing in equity markets. It has identified the following risks and designed risk management strategies, which are embedded in the investment process to manage these risks:

• Quality risk – Risk of investing in unsustainable/weak companies
• Price risk – Risk of overpaying for a company
• Liquidity risk – High impact cost of entry and exit
• Volatility risk – Volatility in price due to company or portfolio-specific factors
• Event risk – Price risk due to a company/sector-specific or market event

MMMCF also uses derivatives for hedging, portfolio balancing and such other purposes.

In the past, the fund maintained significant exposure across large-cap, mid-cap, and small-cap stocks with the flexibility to shift allocation based on market conditions. At present, considering the stretched valuations in the mid and small-caps, it has maintained a slightly high allocation to large-caps (in the range of 30% to 40%). But broadly MMMCF has followed the limits prescribed by SEBI for multi-cap funds.

[Read: Best Multi Cap Funds for 2024 – Top Performing Multi Cap Mutual Funds in India]

Table 7: Top-10 holdings of Mahindra Manulife Multi Cap Fund

Holdings	Sector	% of assets
Canara Bank	Bank	4.34
Bharti Airtel Ltd.	Telecom	3.95
Tata Consultancy Services Ltd.	IT	3.58
Coal India Ltd.	Mining	3.53
Reliance Industries Ltd.	Crude Oil	3.33
Hindustan Petroleum Corporation Ltd.	Crude Oil	3.23
Tata Power Company Ltd.	Power	2.97
State Bank Of India	Bank	2.89
NTPC Ltd.	Power	2.68
Bharti Hexacom Ltd.	Telecom	2.41

Data as of April 30, 2024
(Source: ACE MF, data collated by PersonalFN Research ) 

By and large, MMMCF has held 50 to 60 stocks in its portfolio. The latest portfolio as of April 2024 has 61 stocks, wherein the top 10 comprise 32.91 exposure while the exposure to the top 5 sectors is 40.5% of the portfolio. Thus, it is decently diversified with a range of sectors such as banking, telecom, IT, mining & minerals, oil & gas, energy, healthcare and so on.

The current P/E ratio of MMMCF is about 37.5x, while the P/Bv ratio is 6.4x. Moreover, due to its active management strategy, the fund has a higher portfolio turnover ratio of 1.13 times but is justified in terms of risk-adjusted returns.

To know more about Mahindra Manulife Multi Cap Fund, read its factsheet here.

Equity Mutual Fund Scheme #4: Kotak Emerging Equity Fund

Kotak Emerging Equity Fund (KEEF) is a well-managed scheme in the mid-cap mutual fund sub-category.

Launched in March 2007 as a mid and small-cap fund, was repositioned as a mid-cap fund after SEBI’s recategorization and rationalization norms in 2017.

Accordingly, the fund holds a mid-cap biased portfolio, along with significant exposure to small caps, and a balanced allocation towards large caps.

The investment objective of the Scheme is to generate long-term capital appreciation from a portfolio of equity and equity-related securities, by investing predominantly in mid-cap companies. The scheme may also invest in debt and money market instruments, as per the asset allocation table. There is no assurance that the investment objective of the Scheme will be achieved.

Focusing on high-conviction bets, KEEF has the potential to generate market-beating returns in the long run and reward its investors with noteworthy risk-adjusted returns.

The fund is of the view that since mid-cap companies are relatively under-researched, they can provide opportunities to exploit the gaps between the prevailing market price and intrinsic value.

As an investment strategy, KEEF identifies the hidden potential of midsized companies by utilising the bottom-up stock selection approach. It seeks to invest in companies that are either at their nascent or developing stage and are under-researched but have the potential to deliver higher growth in the long term.

The potential of stocks is guided by considerations such as the following:

• Financial parameters of the company
• The reputation of the management and their track record
• Companies that are less prone to recessions or cycles
• Companies that pursue a strategy to build strong brands for their products or services,
• Market liquidity of the stock 

The process of discovering the intrinsic value is through in-house research supplemented by research available from other sources.

KEEF invests across sectors and follows a buy-and-hold strategy to derive the full potential of the stocks. Kotak Emerging Equity Fund usually holds a diverse portfolio, investing in over 70 stocks spread across 20 sectors.

As of April 2024, the fund has 74 stocks in its portfolio. It holds a quality portfolio spread across sectors and picked by utilising a bottom-up investment strategy.

Table 8: Top-10 holdings of Kotak Emerging Equity Fund

Holdings	Sector	% of assets
Cummins India Ltd.	Automobile & Ancillaries	4.50
Solar Industries India Ltd.	Chemicals	4.32
Supreme Industries Ltd.	Plastic Products	4.31
Schaeffler India Ltd.	Automobile & Ancillaries	3.22
Bharat Electronics Ltd.	Capital Goods	3.02
Thermax Ltd.	Capital Goods	2.86
Oberoi Realty Ltd.	Realty	2.78
Persistent Systems Ltd.	IT	2.78
Power Finance Corporation Ltd.	Finance	2.56
Ipca Laboratories Ltd.	Healthcare	2.53

Data as of April 30, 2024
(Source: ACE MF, data collated by PersonalFN Research) 

KEEF’s current portfolio has exposure to sectors such as auto & auto ancillaries, chemicals, capital goods, finance, IT, healthcare, and so on. The top 5 sectors comprise over 55%, which means it takes high conviction bets on these sectors.

The top 10 stocks at present constitute 32.7% of the fund’s portfolio. Following its investment mandate a dominant portion of its net assets are held in mid-caps, followed by some portion in small-caps, and then large-caps. Even amid elevated valuations in the mid and small-cap segment, KEEF has held a mid-cap biased portfolio. The P/E and P/Bv ratio of the fund currently is 48.6x and 8.2x, respectively. The fund hasn’t held more than 8% in cash-and-cash equivalents in the last one year. Overall, KEEF churns its portfolio less as suggested by a low portfolio turnover of less than 1 times.

Due to a quality portfolio held with conviction, during the mid-cap crash of 2018-19 and the market turbulence of 2020, KEEF displayed remarkable strength, distinguishing itself from many of its peers who struggled to keep pace with the market returns. Also, in the bull phases, the fund has outpaced several of its peers. For these reasons, KEEF is among the top performers in the mid-cap mutual funds category.

Belonging to a process-driven fund house, KEEF is well-placed to capture attractive opportunities across sectors and reward investors with superior risk-adjusted returns in the long run.

To know more about Kotak Emerging Equity Fund, read its factsheet here.

Equity Mutual Fund Scheme #5: Franklin India Opportunities Fund

Launched in February 2000 as a thematic equity scheme, the Franklin India Opportunities Fund (FIOF) taps special opportunities or situations. These include corporate restructuring, government policy and/ or regulatory changes, as well as investing in companies going through temporary unique challenges and other similar instances. In other words, FIOF plays the special situations theme and invests a dominant portion of its assets in such companies from the respective sectors.

Thus, the investment objective of FIOF is to generate capital appreciation by investing in opportunities presented by special situations such as corporate restructuring, Government policy and/or regulatory changes, companies going through temporary unique challenges and other similar instances.

As an investment strategy, FIOF follows a bottom-up approach to stock-picking and pursues a blend of value and growth style. The fund may invest in foreign securities as permitted by the regulatory guidelines. FIOF also enters into derivatives in line with the guidelines prescribed by SEBI from time to time but for hedging and rebalancing purposes only.

For liquidity consideration, FIOF invests up to of its net assets in money market instruments. The cash-and-cash equivalents shall consist of T-bills, G-secs, and repo on G-secs.

FIOF usually holds a diverse portfolio, investing in over 40 to 50 stocks spread across sectors. As of April 2024, the fund has 48 stocks in its portfolio. The top 10 stocks are 41.3% of the portfolio, making it reasonably diversified and not concentrated while it endeavours to tap special situation opportunities. FIOF has a multi-cap exposure, but currently, it is skewed to small-caps (comprising 46.3% of the portfolio), followed by large-caps (35.2%) and holds some mid-caps (8.5%). Also, in the last six months, FIOF has held around 2.5% exposure to overseas equities.

Table 9: Top-10 holdings of Franklin India Opportunities Fund

Holdings	Sector	% of assets
ICICI Bank Ltd.	Bank	5.64
Zomato Ltd.	Retailing	5.16
Bharti Airtel Ltd.	Telecom	4.81
Reliance Industries Ltd.	Crude Oil	4.74
Crompton Greaves Consumer Electricals Ltd.	Consumer Durables	4.16
Hindustan Aeronautics Ltd.	Capital Goods	4.08
Kirloskar Oil Engines Ltd.	Capital Goods	3.67
Kirloskar Pneumatic Company Ltd.	Capital Goods	3.43
Bharat Electronics Ltd.	Capital Goods	2.90
Metropolis Healthcare Ltd.	Healthcare	2.76

Data as of April 30, 2024
(Source: ACE MF, data collated by PersonalFN Research) 

FIOF has exposure to sectors such as banking & finance, technology, energy & utilities, consumer durables, capital goods, healthcare and so on. The top 5 sectors constitute around 50% of the portfolio, making it a bit concentrated.

The present P/E and P/Bv of FIOF are 58.2x and 7.1x respectively, but the fund still holds below 10% in cash-and-cash equivalents. The fund holds the portfolio with conviction as suggested by the low portfolio turnover ratio of less than 1%.

To know more about Frankin India Opportunities Fund, read its factsheet here.

To conclude…

Evaluate scheme options based on a variety of quantitative as well as qualitative parameters. Expense ratio and performance are quantitative parameters, but you should also care equally, if not more, about qualitative aspects such as the portfolio characteristics, the philosophy of the fund house and its investment processes and systems to name a few.

Also, consider your risk profile, investment objectives, financial goals and time in hand to achieve the envisioned goals in mind while selecting any mutual fund schemes for your portfolio. This shall enable you to select not just the best but even the most suitable mutual fund schemes for your portfolio.

If you need any help to build a robust mutual fund portfolio, do reach out to a SEBI-registered investment advisor.

Be a thoughtful investor.

Happy Investing!

Note: This write-up is for information purposes and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. Mutual Fund Investments are subject to market risks, read all scheme-related documents careflly before investing.

This article first appeared on PersonalFN here