MF BETS PROVE THE RANDOM WALK THEORY

A Fortune India study of mutual fund top holdings reveals why investing and outcomes often diverge.

- By V. Keshavdev

DO YOU KNOW WHY stock picking is an art and not a science?

Fortune India did a deep-dive of mutual fund (MF) holdings over the past six years, from the Covid-disrupted FY21 through FY26. The study revealed a cohort of 46 stocks where MFs have collectively ramped up their holding (1%-plus) over the quarters-Q2FY21 to Q2FY26.

Yet the data tells a sobering story. There is virtually no correlation between the magnitude of shareholding increases and subsequent returns, a correlation of just 0.07, statistically indistinguishable from random chance.