It is surprising that when the broader market is unstable and mutual fund inflows are dropping, focused funds are still drawing investors’ interest. The reason is that when the market outlook is volatile, investors look for stocks that are of high-quality. This is where focused funds perfectly stand. So, let’s understand the focused fund meaning and the list of 10 best focused funds for long term investment objectives.
What are Focused Funds?
Focused funds are the equity mutual funds that invest in a smaller number of stocks (not more than 30). Within the focused outlook, these funds have to invest at least 65% of their assets in equity instruments.
Focused mutual funds follow the strategy of picking high-quality stocks with the goal of maximizing returns rather than diversifying to over 50 or 100 stocks, like large-cap or mid-cap funds.
This concentration philosophy helps these funds navigate the market downturns by investing only in the fundamentally strong stocks that span across different sectors and market capitalization.
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10 Best Focused Funds to Invest Now
In order to select the best focused fund, you can study the fund size, past returns, and expense ratio. Here is the list of the 10 best focused funds (Regular-Growth) for long-term wealth creation:
*(Data as on March 26, 2025)
Overview of the 10 Best Focused Funds
Let’s know how much wealth you can create by starting a SIP in these best focused funds based on the last 5-year returns.
1. HDFC Focused 30 Fund
HDFC Focused 30 Fund NAV is ₹213.72. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The top 3 stock allocations of this fund are HDFC Bank, ICICI Bank, and Axis Bank.
By starting a monthly SIP of ₹1,000 in HDFC Focused 30 Fund, your total investment amount of ₹60,000 can grow to ₹1.52 lakhs in 5 years.
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2. ICICI Prudential Focused Equity Fund
ICICI Prudential Focused Equity Fund NAV is ₹83.22. The minimum SIP amount is ₹100 while the lump sum investment is ₹5,000. The top 3 stock allocations of this fund are HDFC Bank, Axis Bank, and Sun Pharmaceutical Industries.
By starting a monthly SIP of ₹1,000 in ICICI Prudential Focused Equity Fund, your total investment amount of ₹60,000 can grow to ₹1.40 lakhs in 5 years.
3. Franklin India Focused Equity Fund
Another one in the list of best focused funds is the Franklin India Focused Equity Fund and its NAV is ₹98.82. The minimum SIP amount is ₹500 while the lump sum investment is ₹5,000. The top 3 stock allocations of this fund are HDFC Bank, ICICI Bank, and Bharti Airtel.
By starting a monthly SIP of ₹1,000 in Franklin India Focused Equity Fund, your total investment amount of ₹60,000 can grow to ₹1.31 lakhs in 5 years.
4. Nippon India Focused Equity Fund
Nippon India Focused Equity Fund NAV is ₹109.58. The minimum SIP amount is ₹100 while the lump sum investment is ₹5,000. The top 3 stock allocations of this fund are HDFC Bank, Axis Bank, and ICICI Bank.
By starting a monthly SIP of ₹1,000 in Nippon India Focused Equity Fund, your total investment amount of ₹60,000 can grow to ₹1.30 lakhs in 5 years.
5. 360 ONE Focused Equity Fund
The next best focused equity fund is 360 ONE Focused Equity Fund and its NAV is ₹44.06. The minimum SIP amount is ₹1,000 while the lump sum investment is ₹1,000. The top 3 stock allocations of this fund are HDFC Bank, Infosys, and ICICI Bank.
By starting a monthly SIP of ₹1,000 in 360 ONE Focused Equity Fund, your total investment amount of ₹60,000 can grow to ₹1.25 lakhs in 5 years.
6. Aditya Birla Sun Life Focused Fund
Aditya Birla Sun Life Focused Fund NAV is ₹131.38. The minimum SIP amount is ₹100 while the lump sum investment is ₹1,000. The top 3 stock allocations of this fund are HDFC Bank, ICICI Bank, and Infosys.
By starting a monthly SIP of ₹1,000 in Aditya Birla Sun Life Focused Fund, your total investment amount of ₹60,000 can grow to ₹1.14 lakhs in 5 years.
7. Kotak Focused Equity Fund
Kotak Focused Equity Fund NAV is ₹22.81. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The top 3 stock allocations of this fund are HDFC Bank, ICICI Bank, and Bharti Airtel.
By starting a monthly SIP of ₹1,000 in Kotak Focused Equity Fund, your total investment amount of ₹60,000 can grow to ₹1.13 lakhs in 5 years.
8. Mirae Asset Focused Fund
Mirae Asset Focused Fund NAV is ₹23.40. The minimum SIP amount is ₹99 while the lump sum investment is ₹5,000. The top 3 stock allocations of this fund are HDFC Bank, Infosys, and ICICI Bank.
By starting a monthly SIP of ₹1,000 in Mirae Asset Focused Fund, your total investment amount of ₹60,000 can grow to ₹1.10 lakhs in 5 years.
9. SBI Focused Equity Fund
SBI Focused Equity Fund NAV is ₹326.27. The minimum SIP amount is ₹500 while the lump sum investment is ₹5,000. The top 3 stock allocations of this fund are HDFC Bank, Bajaj Finance, and Kotak Mahindra Bank.
By starting a monthly SIP of ₹1,000 in SBI Focused Equity Fund, your total investment amount of ₹60,000 can grow to ₹1.10 lakhs in 5 years.
10. Axis Focused Fund
Axis Focused Fund NAV is ₹50.98. The minimum SIP amount is ₹100 while the lump sum investment is ₹100. The top 3 stock allocations of this fund are ICICI Bank, HDFC Bank, and TCS.
By starting a monthly SIP of ₹1,000 in Axis Focused Fund, your total investment amount of ₹60,000 can grow to ₹92,000 in 5 years.
Pros of Investing in Focused Funds
With the portfolio of 20 or 30 stocks, focused funds are the only type of equity funds that follow this strategy. Here are the benefits you can get by investing in these concentrated funds.
1. High-Quality Stocks
Focused funds generally invest in high-quality stocks that are fairly priced and hold great potential for growth. Along with these stocks, these funds also keep their money in cash instruments for liquidity.
2. High Returns
By strategically placing the bets on fundamentally viable stocks, the fund manager tries to generate higher returns for wealth creation. Unlike other equity funds, which invest in more than 50 or 100 stocks to minimize risk, the focused funds clearly keep an eye on their strategy to provide competitive returns.
3. Eliminates the Risk of Over-Diversification
Over-diversification is a lesser talked about risk but can hugely hamper the success of your investment. The greater the number of stocks you hold, the higher the chances that your returns get diluted or distributed by the underlying risk. Focused funds with a maximum of 30 stocks in the portfolio easily help in mitigating the risk of over-diversification.
Due to the active management style of focused funds, the fund manager will invest in stocks across different sectors such as finance, technology, and healthcare. Additionally, they can also invest across large-cap, mid-cap and small-cap stocks. This strategy helps the fund manager to smartly navigate market uncertainties and focus on maximizing returns.
5. Ideal for Long-term Goals
Through investing in a few but high-quality stocks, focused funds are suitable for long-term investment objectives. These funds take a selective approach and hence, it takes time for stocks to achieve their true value. Therefore, they are suitable for investors who have a higher-risk appetite to face market cycles over the long run.
Cons of Investing in Focused Funds
After understanding the benefits of investing in the best focused funds, let’s look at the disadvantages as well.
1. High Risk
Despite the possibilities of higher returns, the focused funds also work in the realm of high risk. As they invest only in 30 stocks, the probability of a single stock navigating the total risk reduces.
2. Under Diversification
Mutual funds are best for diversification, but on the contrary, focused funds are known for under-diversification. This means that these funds hold a higher risk as the poor performance of a single stock can drastically pull down the total returns.
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Taxation Rule of Focused Funds
Income earned from focused funds is taxed on the basis of the applicable taxation rules of equity funds. The STCG (Short-term Capital Gains) are taxed at a rate of 20% if the units are sold within 1 year.
For the units sold after 1 year, the LTCG (Long-term Capital Gains) will be taxed at a rate of 12.5% only if the gains are more than ₹1.25 lakhs in a financial year.
Conclusion
What is focused fund? As the name suggests, these funds keep a few stocks (up to 30) in their basket to maximize returns over a long period of time. They are ideal for investors who are looking to invest in top-notch stocks with the fund manager’s expertise. With targeted investments, these refined funds become investors’ favourites in times of market volatility.
But while investing in any mutual fund, it is better to do your research and keep your investment objective in mind. Open free Demat account with SMC Global Securities and keep investing in stocks or mutual funds like a pro.
Frequently Asked Questions – FAQs
1. What is the difference between a focused fund and a value fund?
Focused funds are the funds that follow a strategic allocation by investing in up to 30 stocks, while value funds consider the value investing strategy with no limitation on the number of stocks. Though both funds are actively managed and try to generate market-based returns.
2. What is the difference between focused and flexi cap funds?
Focused funds follow the concentrated approach, while flexi cap funds can invest across market caps. Though both funds can smartly allocate money across different market caps and sectors, the condition of a limited number of stocks applies only to focused funds.
3. What is the return of SBI Focused Equity Fund?
SBI Focused Equity Fund has generated 22.23% returns in the last 5 years and 13.83% returns in the last 10 years, making it suitable for long run investment.
References:
https://www.amfiindia.com/investor-corner/knowledge-center/SEBI-categorization-of-mutual-fund-schemes.html
Author: All Content is verified by SMC Global Securities.
WHY SMC
- 20 Lac+ unique clients
- 33+ Years of Serving
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