11 penny stocks with high mutual fund stakes. Hidden gems or risky bets? - Mutual Funds Bet on Penny Stocks: Opportunity or Risk?

Mutual funds are making some bold moves—data from the June quarter reveals that they are holding stakes in nearly 100 penny stocks, defined as stocks trading under Rs 20 with market caps below Rs 1,000 crore. Interestingly, 11 of these have MF holdings above 2%, raising eyebrows across the market. But here’s the twist: eight out of these 11 penny stocks have posted negative returns in the last three months, and most of them trade on alarmingly low volumes. Meanwhile, the more actively traded penny stocks barely have any mutual fund presence.This raises a key question: are mutual funds identifying long-term value early, or stepping into risky territory? Penny stocks may seem attractive due to their low prices, but they carry major risks—poor liquidity, high volatility, and limited transparency. Institutional backing can add a layer of credibility, but it doesn’t guarantee safety or returns. (Data Source: ACE Equity) Mutual Funds Bet on Penny Stocks: Opportunity or Risk?