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Focused Mutual Fund : Focused mutual funds that invest in limited stocks are becoming increasingly popular among investors. The asset base of this category has increased by 31 percent to Rs 1.43 lakh crore in the first quarter of the current financial year. A focused mutual fund is a type of equity mutual fund that invests in a limited or small number of stocks. There are guidelines from market regulator SEBI to allow focused funds to invest in a maximum of 30 stocks.
Gave returns up to 40-60 percent
Industry data shows that some of the focused funds like Invesco India Focused Fund, Mahindra Manulife Focused Fund, JM Focused Fund, and HDFC Focused 30 Fund have delivered remarkable returns of up to 40-60 percent in the last year.
The fund manager of a focused mutual fund has to be extremely careful in-stock selection as he has to identify the best investment opportunities in the market without any bias towards any specific market capital or sector.
How much did AUM reach?
According to data from the Association of Mutual Funds in India (Amfi), the assets under management (AUM) of focused funds rose to Rs 1.43 lakh crore in the April-June quarter of the current fiscal as against Rs 1.09 lakh crore in the same quarter a year ago.
Firoz Aziz, Deputy CEO, of Anand Rathi Wealth Ltd, said that this increase in AUM reflects the attractiveness of focused funds as an option for portfolio management services (PMS). Especially the recent tax changes have made PMS less attractive due to high cost and tax implications.
Advice for investing in focused funds through SIP
Industry experts recommend investing in focused funds through SIPs as a sensible strategy in the current market environment. These funds invest in fewer stocks, so SIPs can help reduce risk by increasing the investment over time.
In total, various mutual fund houses offer 31 focused schemes in this category. These schemes have given a return of 19-60 percent in the last one year.
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