Mutual Funds – Market Cap Breakdown

Market cap breakdown is applicable for equity funds. It gives information about the market capitalization range of the shares the fund is investing in. In general large cap companies’ shares are considered to be less risky compared to medium and small cap companies. So this breakdown information is also a decisive factor while choosing a scheme.

Market capitalization of a fund is usually given in one of the below 2 bucket formats.

BIllion Buckets

Calculation

Let’s say an AUM of a mutual fund is Rs 100 cr. And it invested this amount as given below

20 Cr in the securities of company ABC whose market capitalization is Rs 50 Billion
10 Cr in the securities Company DEF whose market capitalization is Rs 20 Billion
20 Cr in the securities of Company with a market cap of Rs 1 Billion
20 Cr in a Company with a market cap of Rs100 Million
20 Cr in a company with market cap of Rs50 Million
and it holds 10Cr cash to meet redemption requests.
 
If we categorize Rs 20 Bil above market cap companies as Large cap and 500 Millions to 20 Bil as Mid cap and below Rs 500 Mil as small cap.

Then the market capitalization of the above example company would be

Large Cap  20%
Mid Cap      30%
Small Cap  40%
Cash           10%

Please note that instead of giving the break up in the above format it can also be given directly in market cap values i.e. 100+ Bil, 1-100 Bil, 100 Mil to 1 Bil etc

Stock exchange Benchmark Buckets

An example of this format is

FTSE 100                50%
FTSE 250                20%    
FTSE Small cap     20%
Non FTSE                 5%
Cash                         5%

The example considers a UK fund. The above breakdown means the fund invests 50% of its assets in the securities of companies which are constituents of FTSE 100 index of LSE and 20% in the securities of the companies which are constituents of FTSE Small Cap and 5% in the securities of the companies which are not part of any of these 3 FTSE indices.

Note: The constituents of FTSE 100 are not covered in FTSE 250. FTSE 250 are next 250 companies after the 100 companies which are covered by FTSE 100 in the market cap descending list of LSE.

 

 

 

 

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January 9, 2010 | Filed Under Mutual Funds 

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