Invest in Best Focused Funds in India 2024
Discover the best Focused Funds to invest in India for 2024. Learn who should invest, key benefits, risks, and find the top performing Focused Funds in the market
What is Focused Mutual Funds?
A focused mutual fund is a type of equity mutual fund that invests limited number of stocks. The SEBI has stringent guidelines allowing focused funds to invest in a maximum of 30 shares. It means that the investment just focuses on these 30 shares and not more.
Who Should Invest in Focus Mutual Funds?
- Experienced Investors: Experienced Investors with a high-risk appetite who knows the ins-and-outs of the market can consider investing in this type of fund
- Volatile Market Investors: Investors who do not mind market volatility can consider investing in this fund as the underlying assets are subject to high market volatility
- Liquid Investment Seekers: Investors needing liquidity and prefer investments that can easily be converted into cash
- Investors Seeking High Conviction Ideas: Those who believe in the potential of select companies and want to capitalize on their growth.
- Portfolio Diversifiers: Investors looking to add concentrated exposure to high-growth sectors that they see have potential to grow
Best Performing Focused Mutual Funds
| Fund Name | Category | Risk | 6 Months Return | 1 Year Return | Rating | Fund Size (₹ Cr.) |
|---|---|---|---|---|---|---|
| HDFC Focused 30 Fund | Focused Funds | Very High | 21.63% | 41.60% | — | 13,136 |
| Invesco India Focused | Focused Funds | Very High | 28.20% | 61.40% | — | 8,820 |
| Mahindra Manulife Focused | Focused Funds | Very High | 25.13% | 50.60% | — | 1,551 |
| ICICI Prudential Focused Equity | Focused Funds | Very High | 26.09% | 44.79% | — | 9,112 |
| Franklin India Focused Fund | Focused Funds | Very High | 20.47% | 35.64% | — | 12,198 |
Factors to consider while investing in Focused Mutual Funds
- Concentration Risk: It is important to understand that concentration of funds in a few stocks is always a risk since underperformance can significantly impact returns
- Fund Manager’s Expertise: Evaluate the experience and track record of the fund manager in managing focused funds
- Investment Objective: Evaluate your financial objective first and check whether returns from the funds can help you reach your objective. Be aware that you need to stay invested for 5-7 years to reach your financial goals
- Performance History: Analyze historical performance data over different market cycles to gauge how the fund has performed in various conditions.
- Expense Ratio: Consider the expense ratio, as lower expense can result in better gains
Major Benefits of Focus Mutual Funds
- Bigger Returns: By concentrating investments in select stocks, these funds can achieve significant capital appreciation and give you good returns
- Active Management: Fund managers actively manage the funds by daily monitoring the performance of the funds and churn funds if they do not perform well
- Transparency: Investors often have a clearer understanding of where their money is headed since they are holding a minimum number of holdings
Risks Involved in Focus Mutual Funds
- Concentration Risk: Since the stocks are limited, the effect of underperforming of these holdings can significantly impact your returns
- Market Volatility: These funds are more subject to market conditions than normal funds
- Sector-Specific Risks: If a fund concentrates on specific sector, then any sector downturn can significantly impact your returns
- Lack of Diversification: A focused approach may also suffer from lack of diversification
- Heavy reliance on Fund Manager: The success of these funds is heavily reliant on the fund manager’s decisions
Frequently Asked Questions (FAQs) about Focus Mutual Funds
1. What are Focus Mutual Funds?
Focus Mutual Funds are equity mutual funds that invest in a concentrated portfolio of limited stocks (usually 30)
2. Who should consider investing in Focus Mutual Funds?
Experienced investors, long-term investors, and investors with high-risk taking ability are focus mutual funds
3. What are the potential benefits of investing in Focus Mutual Funds?
High return, highly concentrated funds, active fund management, and greater transparency
4. What risks are associated with Focus Mutual Funds?
Concentration of funds, market volatility, and sector underperformance are some of the risks associated with Focus Mutual Funds
5. How do I choose the best Focus Mutual Fund?
Consider factors like historical performance, your risk tolerance, expense ratio, fund manager’s track record, and your investment goals before choosing the fund. You can seek the assistance of Fincover, whose MF experts would consider you pick the best Focused Fund in the market