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Aditya Birla Capital LimitedAditya Birla Capital Limited (“ABCL”) is a listed systemically important non-deposit taking Non-Banking Financial Company (NBFC) and the holding company of the financial services businesses. ABCL and its subsidiaries/JVs provides a comprehensive suite of financial solutions across Loans, Investments, Insurance, and Payments to serve the diverse needs of customers across their lifecycles. Powered by over 61,600 employees, the businesses of ABCL have a nationwide reach with over 1,690 branches and more than 200,000 agents/channel partners along with several bank partners.
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What is a Focused Mutual Fund?
A focused mutual fund is a type of equity fund which invests in up to 30 handpicked stocks and offers a concentrated portfolio of securities.
Advantages of Focused Mutual Funds
Long-term growth
With specialised stocks which have a good growth potential, you can earn long-term returns on investments
Portfolio diversification
The portfolio is diversified across market capitalisations and sectors so that the best companies comprise the portfolio allocation.
Handpicked quality stocks
Quality stocks which have passed a rigorous technical and fundamental analysis are picked for their return potential.
High Conviction Investing
The fund manager focuses on a limited number of their highest conviction stock picks, potentially leading to greater returns if those selections perform strongly.
Explore Focused Mutual Funds
Most Popular
AUM: 23427(Cr)
Risk: Very High
- MIN. INVESTMENT 500
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹10000
- Get (30 Yrs) ₹24,850*
*Projections/estimations is backtested using historical data.
Most Popular
- AUM: 23427(Cr)
- Risk: High
- MIN. INVESTMENT 1000
- 5 YRS RETURNS 33.32%
- Invest (Per Month) ₹15000
- Get (30 Yrs) ₹34,850*
*Projections/estimations is backtested using historical data.
Focused Mutual Funds Returns Calculator
REGULAR INVESTMENT
SIP
Invest systematically in regular amounts and build a corpus with a disciplined investing habit.
ONE TIME INVESTMENT
Lump sum
Invest once with the facility of lump sum investing and save at your will. Time the market correctly and earn good returns.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
Total Amount Invested
₹ 0
after 30 years you will get a return of
₹ 0
Disclaimer: Projections/estimations is backtested using historical data.
ABCD - One app to build a diversified investment portfolio
Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.
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Online investments with a fully integrated digital platform
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Understanding Focused Mutual Funds
Table of Contents
What are Focused Funds?
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Focused Funds are a subcategory of equity mutual funds that invest a minimum of 65% of their portfolio in equity stocks and securities of a select number of companies. The fund can have an allocation in a maximum of 30 stocks giving you the benefit of a specialised and concentrated portfolio of quality stocks.
What are the features of Focused Funds?
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Handpicked securities across a maximum of 30 companies
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Very high risk-return trade-off
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Diversification across market sectors and company size
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Suitable for investors who have some investing experience
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Earn tax-free returns up to ₹1 lakh if you stay invested
What is the meaning of Market Capitalisation?
Market capitalisation means the total value of a company’s shares
The total number of listed shares is considered for calculation
The current market value is taken to calculate the market cap
Formula -
Market capitalisation = total number of outstanding shares X current market value per share
What should be the investment horizon for Focused Funds?
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Focused Funds have a concentrated portfolio which makes them risky in the face of market volatility
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They are prone to short-term volatility which might yield negative investment returns
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To avoid short-term volatility, an investment horizon of at least 5 years is recommended
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A long-term horizon also helps earn attractive investment returns
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You also get a tax benefit on staying invested for a longer tenure
What is the tax implication of Focused Funds?
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Returns up to ₹1 lakh are tax-free if you stay invested for 12 or more months
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Returns exceeding ₹1 lakh are taxed at 10%
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For redemption within 12 months, returns are taxed at 15%
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Dividends earned, if any, are taxed at your income tax slab rate
What are the payout options?
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Dividend option
Earn dividends on your investment at regular intervals
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Growth option
Accumulate the returns over the investment tenure and get a lump sum amount on redemption
FAQs On Focused Mutual Funds
Both focused funds and diversified equity funds such as multi-cap funds
, flexi-cap funds, etc. have their own pros and cons.
While focused funds carry a concentration risk with limited diversification, diversified funds also carry less exposure to high-potential stocks. It is important to make an informed decision and decide which one is better for your investment needs based on your risk tolerance and other factors.
No, focused funds do not have a lock-in period. You can redeem them at your convenience. However, an exit load might apply.
It is usually advised to stay invested in focused funds for 5-7 years in order to gain maximum potential returns. A longer duration can help you tide over short-term volatility and grow wealth.
Yes, you can invest in focused funds through SIP or lumpsum , whichever suits your financial capacity best.
Yes, focused funds are highly volatile. Since the investment scope is narrow with a limited number of stocks, risks are high. The limited amount of securities exposure also makes focused funds considerably risky.
Make sure that you invest in the right fund with a credible performance history and stay invested for long enough to increase your chances of higher rewards with higher risk.
In the equity market, higher risk is usually associated with a higher chance of rewards. Mitigating risks helps you put yourself in a more favourable position for getting good returns.
In order to handle the risks of a focused fund, ensure that you actively monitor your fund, pick a fund with a good performance history, and stay invested patiently for 5-7 years.
Focused funds can invest in a maximum of 30 stocks as per SEBI (Securities and Exchange Board of India) guidelines.
No, focused funds are not sector or industry-specific. They can invest in a few different sectors focusing on the potential of the stocks.
Lack of diversification and high volatility are the top risks of a focused fund. If you are prepared with the right amount of research, experience, and risk tolerance, you also stand a chance to reap good benefits.
The most important thing to take note of before investing in a focused fund is your risk appetite. This category of funds is ideally not meant for new investors or investors with a lower risk appetite. If you are confident about taking higher risks, you could get a shot at higher rewards too.
Appetite for Risk - Since focused funds concentrate their investment in only a select number of stocks
, risks are high. You should invest only if you have a higher risk appetite.
Investing Experience - Investing experience helps you increase risk tolerance as well as learn how to be patient during downturns. You can then be prudent about selling your stocks only when long-term returns manifest.
Long-term Investment Horizon - Due to the volatility and high risk factor, it is important to stay invested for a long term. This way, you can hedge the risks and earn better returns.
Limited Number of Stocks - Focused funds invest a minimum of 65% of their portfolios in equity stocks and securities of a select number of companies. They allocate to not more than 30 stocks.
No Restrictions on Investment Universe - Focused funds can invest across small-cap, mid-cap, and large-cap stocks, giving you the best benefits of all 3 in one portfolio.
Large-cap and mid-cap funds invest majorly in large-cap and mid-cap stocks respectively, with a relatively higher number of stocks than focused funds. Focused funds invest a low, concentrated number of stocks across market capitalisations.
Focused funds are better researched investments than other types of funds, they have a high risk-return ratio, and they have no restrictions with regard to the sizes of companies they invest in.
Types of Focused Mutual Funds
Funds Based On Market Capitalisation
Funds Based On Investment Style
Other Asset Class Funds
ETF Funds
Invest in funds listed and traded on the stock exchange
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Fund of Funds
Mutual funds that invest in other mutual funds both in India and globally
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Hybrid Funds
Get a mix of equity, debt and other asset classes for a diversified portfolio
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Index Fund
Passively-managed mutual funds tracking a particular index
Know More