A focused fund is a type of mutual fund that invests in a few selected stocks or bonds, generally in a limited number of sectors. Most of the mutual fund investors believe that a focused portfolio would help to earn great returns
Shivani Verma | Jan 13, 2025 |
Invest in These Top-Focused Mutual Funds in January 2025
A focused fund is a type of mutual fund that invests in a few selected stocks or bonds, generally in a limited number of sectors. Most of the mutual fund investors believe that a focused portfolio would help them to earn great returns. They think that many mutual fund schemes give average returns because they invest in a very large and highly diversified portfolio. In this situation, investors should consider investing in focused mutual fund schemes.
Focused funds can be risky especially in the short term, because they mainly invest in stocks. This type of investment is suitable for those investors who have a high-risk tolerance and long-term investment horizon to prevent short-term market volatility.
As per the SEBI norms, Focused equity mutual fund schemes can invest in a maximum of 30 stocks in their portfolio. These schemes have no limitations at the time of investing in funds such as flexi cap funds, they can invest in any market sector and capitalisations.
The fund manager can select stocks on the basis of their opinion and invest a significant amount in those stocks. Such investments can give great rewards if the choices are correct, if some choices turn out to be wrong, then the scheme can face more losses. This is the risk with concentrated investments. If the fund manager successfully identifies the market capitalisations and sectors ahead of the market, it will be beneficial for the scheme.
If an investor is ready to take more risk and has an investment time period of around seven years, they can consider investing in these schemes. From these schemes, the SBI Focused Equity Fund has been in the top fourth quartile for the past five months, before that the scheme had been in the top third quartile. Sundaram Focused Fund has been in the top third quartile in the past month, earlier the scheme had been in the top fourth quartile.
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