Focused Funds

Focused Funds help you to concentrate your money on stocks generating high returns or any investment theme. Options to invest in companies like HDFC, Tata, Invesco and more are available, which your fund managers believe will outperform in the market.

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Perfectly aligns with long-term goals

Perfectly aligns with long-term goals

Potential for active management of risk

Potential for active management of risk

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Best Focused Mutual Funds to Invest

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    What are Focused Mutual Funds?

    Focused funds are those mutual funds which can have a maximum of 30 companies in the fund. According to the regulations by the Securities and Exchange Board of India (SEBI), the fund manager can choose these 30 companies from any range be it Focused Funds, medium cap or small cap. These stocks in the focused mutual funds are closely related to each other.

    The focus of the fund is generally concentrated in a particular sector or domain. For example, there may be a focused mutual fund that is only investing in the healthcare sector because the fund manager analyzes that the healthcare sector might perform well in future. Then he will choose stocks for the following mutual fund accordingly.

    Benefits of Investing in Focused Funds

    • High Returns

      The probability of yielding high returns in focused mutual funds is high as the funds are invested in a limited set of companies. This results in higher returns with increased probabilities.

    • Diversification across Companies

      Focused funds allow the inventors the freedom to invest in diverse company sizes and are not restricted to any specific spectrum. This freedom to invest in 30 different stocks can let them split between companies depending on the market conditions. Hence, investors get the flexibility to switch across markets and earn higher profits.

    • Exposure to the High Performing Stocks

      Since the number of companies in which the money of the retail investor will be invested is limited, the fund manager devotes more time over analyzing each company. This ensures that he thoroughly studies the company inside out. Hence, the chances that the stocks that will be selected in the fund will be high-performing are higher. 

    Who should invest in Focused Funds Funds?

    Investing in the top Focused Equity Funds can be ideal for investors with specific objectives. So below are some of the categories of investors who should consider investing in focused funds.

    • Investors with Experience

      Focused funds may be an ideal option for investors who are very experienced in the market. Focused funds are generally more volatile as compared to other mutual funds as they react aggressively to sector-specific news. Thus, experienced investors can understand the risk associated with it and proceed with their plan of investment accordingly

    • Investors with an Appetite for Risks

      For investors with higher risk appetites, focused mutual funds could be a great investment option. Since the chances of getting higher returns are increased, the chance for risk or loss also increases accordingly.

    • Investors with Long Investment Horizon

      Investors who are seeking to invest their money for a longer time frame can choose focused mutual funds

    • Investors Seeking for Potentially Higher Returns

      Even though focused funds are the ideal choice for investors with an appetite for risks, they can also provide the maximum returns. This is because these are invested in well-researched and analyzed funds having decent records. So if you are among the ones ready to depend on such research from your fund manager, these are the best options for you.

    • Investors Who Want to Invest in Concentrated Portfolio

      If you do not want to diversify your investment in different types of companies or stocks, then focused funds can be a suitable option. In this type, you can easily invest in a maximum of 30 stocks, keeping your portfolio less diversified and more impactful.

    • Investors Wanting to Invest in a Specific Industry

      If you want to invest money in a specific sector or industry, such as the automobile industry or the healthcare sector, then focused mutual funds could be an ideal option for you.

    Frequently Asked Questions

    Focused funds are often run by well-reputed AMCs which offer steady and consistent results and have less volatility. Some of the best-performing Focused funds you can invest your money in 2024 are:

    • SBI Focused Equity Fund
    • HDFC Focused 30 Fund
    • Axis Focused 25 Fund
    • Mirae Asset Focused Fund

    Your returns from Focused mutual funds will be taxed under two categories.

    • Under Capital Gains: Short-term capital gains at 15%; Long-term capital gains (over Rs. 1 lakh) at 10%.
    • Tax on Distributed Income Dividend Option: At applicable income tax slab

    Yes, Focused Funds mutual funds have certain risks involved with them, but they are not as high as mid cap or small cap funds. For this reason, the returns on these funds are stable and suitable for conservative investors.

    As an investor, you should look at the following features of a Focused mutual fund before making a decision.

    • Historical performance of the fund manager
    • Expense ratio
    • Past performance of the Focused MF
    • Fund portfolio

    Try to invest your money in a Focused fund for a minimum of 3 to 5 years to get a good return after the tenure ends.

    The average return on a one-year Focused mutual fund is generally 16.15% depending on the market. However, as the market is volatile, you cannot expect to get the same return as you got in the previous years.

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