Focused Equity Funds: High Conviction Stock Investments

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.

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.

INVEST AMOUNT

PERIOD

RETURNS

Total Amount Invested

₹ 0

after 30 years you will get a return of

₹ 0

Disclaimer: Projections/estimations is backtested using historical data.

TARGETED RETURN VALUE

INVESTMENT PERIOD

RETURNS

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

Invest in mutual funds online with the ABCD app and build your portfolio one click at a time.

A choice of different types of mutual fund schemes
Online investments with a fully integrated digital platform
Facility to switch, redeem and invest more from a single platform

Download our mobile app now

PLAY STORE

APP STORE

Scan the QR code to download our Mobile App

Download our mobile app now

PLAY STORE

APP STORE

Understanding Focused Mutual Funds

Table of Contents

What are Focused Funds?What are the features of Focused Funds?What is the meaning of Market Capitalisation?What should be the investment horizon for Focused Funds?What is the tax implication of Focused Funds?What are the payout options?

What are Focused Funds?

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?

Handpicked securities across a maximum of 30 companies
Very high risk-return trade-off
Diversification across market sectors and company size
Suitable for investors who have some investing experience
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?

Focused Funds have a concentrated portfolio which makes them risky in the face of market volatility
They are prone to short-term volatility which might yield negative investment returns
To avoid short-term volatility, an investment horizon of at least 5 years is recommended
A long-term horizon also helps earn attractive investment returns
You also get a tax benefit on staying invested for a longer tenure

What is the tax implication of Focused Funds?

Returns up to ₹1 lakh are tax-free if you stay invested for 12 or more months
Returns exceeding ₹1 lakh are taxed at 10%
For redemption within 12 months, returns are taxed at 15%
Dividends earned, if any, are taxed at your income tax slab rate

What are the payout options?

Dividend option

Earn dividends on your investment at regular intervals
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.