A focused fund is an equity mutual fund investing in a limited number of stocks. As per SEBI guidelines, a focused fund can invest in a maximum of 30 stocks. Other equity mutual funds typically hold 50-100 stocks. Some focused mutual funds also state their objective to focus on the large-cap or mid-cap stocks. Other funds do not specify any such category focus and follow a bottom-up stock selection investment strategy. The objective of focused funds is to deliver high returns by investing in a limited number of quality companies with growth potential.
The entire strategy of focused funds is to hit the bull’s eye with the right stocks and earn a high return. Investors who are willing to face market volatility over a longer time horizon of 5 years and plus in expectation of higher returns should look at this category.
The minimum investment varies from scheme to scheme. It could range between Rs.100/ – to Rs. 5,000/-.
Focussed Funds receive the same tax treatment as other equity funds.