Focused funds are high risk high are high return options
Scheme | Date | 1Y Avg Return | 3Y Avg Return | 5Y Avg Return |
Franklin India Focused Equity Fund | 31/03/2019 | 23.92 | 22.44 | 20.69 |
Reliance Focused Equity Fund | 31/03/2019 | 26.97 | 23.14 | 20.66 |
SBI Focused Equity Fund | 31/03/2019 | 21.35 | 19.10 | 19.75 |
Quant Focused Fund | 31/03/2019 | 23.75 | 22.20 | 19.03 |
Axis Focused 25 Fund | 31/03/2019 | 19.04 | 16.40 | 18.02 |
Aditya Birla Sun Life Focused Equity Fund | 31/03/2019 | 18.05 | 17.36 | 16.42 |
Motilal Oswal Focused 25 Fund – Regular Plan | 31/03/2019 | 17.66 | 14.52 | 16.15 |
DSP Focus Fund | 31/03/2019 | 18.07 | 15.81 | 14.39 |
Principal Focused Multicap Fund | 31/03/2019 | 16.68 | 14.90 | 13.74 |
HDFC Focused 30 Fund | 31/03/2019 | 18.61 | 14.81 | 13.23 |
ICICI Prudential Focused Equity Fund | 31/03/2019 | 15.11 | 14.05 | 13.13 |
Sundaram Select Focus Fund – Regular Plan | 31/03/2019 | 15.06 | 12.22 | 10.57 |
IDFC Focused Equity Fund – Regular Plan | 31/03/2019 | 15.49 | 12.19 | 10.53 |
IIFL Focused Equity Fund – Regular Plan | 31/03/2019 | 9.99 | 11.40 | |
IDBI Focused 30 Equity Fund – Regular Plan | 31/03/2019 | -5.23 | – | |
BNP Paribas Focused 25 Equity Fund – Regular Plan | 31/03/2019 | -10.65 | – | |
Source – Valueresearchonline
The answer to that ultimately lies in your risk profile and ability to remain invested for long periods.
A focused equity fund is a new category defined by market regulator SEBI. These funds run concentrated portfolios with a maximum of 30 stocks. Many of these funds are erstwhile large cap or mid and small cap funds which were converted to focused funds post the recategorization.
As a result, the portfolio leaning in terms of market capitalisation reflects the previous position in large cap or a mix of large mid and small cap – rather than being a true multicap fund in most cases.
Common features
- Limited number of stocks – mostly between 20-30 in number
- Most funds with the exception of 1 or 2 have a large cap bias
- The standard deviation or volatility of returns is higher than benchmark in most cases.
Here is a quick quiz to see if these funds are meant for you
- Are you looking for long term wealth creation?
- Can you absorb volatility in the short term?
- Are you patient enough to hold on even if the fund is giving you a negative return?
- Will you hold the fund at least for 7 years?
- Are you willing to invest some time by yourself or with an advisor to choose the right fund?
- Are you willing to pick the right fund manager rather than focus on the past returns of these funds?
If and only if your answer to all these questions is a YES, you should consider investing in a focused equity fund.
And remember diversifying your portfolio and adhering to asset allocationAsset allocation is essentially an official term for what you intuitively know is a healthy investment practice. For starters most households are likely to own some property and gold. That is diversification in asset allocation. You allocate the money you... More is the foundation for long term wealth creation. Don’t go putting all your eggs in one basket!