Focused mutual funds are also known as concentrated mutual funds. This fund holds limited number of quality stocks. As focused funds invests in limited number of stocks that’s why focused fund does not offer benefit of diversification. Focused equity funds are suitable for long term aggressive investors. If you are planning to invest in focused equity funds, here are Best Focused Equity Funds for Investment in 2021.
What are Focused Funds?
Focused Funds invest 65% of total assets in equity and its related securities. As per SEBI guideline, focused fund invest in maximum 30 stocks. Focused funds are multicap funds that invests in any capitalization large cap, small cap, mid cap etc. There is no restriction on where these funds can invest. Fund manager are free to allocate funds.
Benefits of Focused Funds
Quality Investment – Fund manager carryout good research before selection of stock. This means fund manager makes quality investment that are expected to give better returns to the investor. The investment done in this type of funds are research funds.
Probability of Higher Returns – Focused fund are risky in nature. However, as investment is made in quality stocks probability of getting returns in these fund is higher.
Mitigation of risk against over diversification – Investor can benefit from concentrated stock portfolio selection. This fund mitigate risk of over diversification. Fund manager keeps low number of stocks in the portfolio. This means tracking of portfolio is easy.
Best Focused Equity Funds for Investment 2021
(1) SBI Focused Equity – Growth Fund
SBI Focused Equity fund is first in the list of best focused funds. SBI Focused Equity fund is three star rated fund. SBI Focused equity fund has generated very good returns for the investor in last one year 52.25% (As on 22nd June, 2021). This fund is managed by experienced fund manager. One can invest in SBI Focused Equity fund with long term perspective.
(2) Axis Focused 25G
Axis Focused 25G is one of the best focused fund. This fund makes investment in 25 different stocks and create concentrated portfolio. This fund focus on the companies that has capacity to sail through adverse business cycle without volatility. This fund is managed by expert fund manager. This fund has generated 48% returns in last one year.
(3) ICICI Prudential Focused Equity Fund
ICICI Prudential is four star rated fund. This fund invests in large cap, small cap and mid cap stocks. ICICI prudential focused equity fund has ability to deliver higher returns. This fund has invested majority of capital in financial, health care, technology and energy. This fund has generated 49% returns for the investor in last one year.
(4) Motilal Oswal Focused 25 Fund
Motilal Oswal Focused 25 fund is three star rated fund. This fund has ability to deliver higher returns for the investors. The fund has majority of its money invested in Financial, technology, services, automobile and healthcare sector. This fund has delivered 45% returns to the investor in last one year.
(5) Principal Focused Multicap Fund
Principal Focused Multicap fund is very good fund for the investment. This fund is performing better and constantly generating higher returns for the investors. This fund is managed by experience fund manager. Expense ratio of this fund is slightly higher. In last one year this fund has generated 56% returns for the investor.
Points to consider before investing in Focused Funds
Tax Impact – You should check tax impact before investing focus fund. Focus funds are equity oriented fund. Two types of taxes are applicable on focused fund. LTCG or Long term capital gain is taxed at 10% on the profit above 1 Lakh in a year. In case amount is withdrawn before 1 year you need to pay short term capital gain tax which is 15% on the profit.
Expertise of Fund Manager – Skill and knowledge of fund manager is extremely important. Fund manager has to do research and find out stock that offers assured returns. You should look at fund manager experience and skill before investing.
Financial Objectives – Financial objective of investor is another important factor of consideration. Your financial objective should be long term at least 5 to 7 years. You should be clear with your financial objective before making investment.