In this article, we will discuss one of the growing categories in mutual funds i.e., Focused Equity Mutual Funds. How good is this category and should you invest or not?
Focused Equity Mutual Funds:
- In Focused Equity Mutual Funds, there is a limited number of stocks 30 stocks in the portfolio.
- Other than this there is no restriction on other factors like minimum allocation to large-cap, mid-cap, etc., or to any sectors.
- There are currently 26 focused equity funds in the market where SBI Focused Equity Fund is the biggest mutual fund in this category with Asset Under Management (AUM) of over Rs. 28,400 Cr. SBI, Axis, Mirae Asset, Franklin India, and Nippon India are the Top-5 AMCs in this category.
- This fund will generally have a Beta of over 1 as compared to the BSE 500 Index being highly risky.
What Should Investors Do:
Mutual Funds are very debatable investing instruments where there is high stock diversification. Focused Equity Mutual Funds are highly concentrated. Before investing in focused equity funds, one needs to understand the allocation of a particular fund in the large, mid, and small-cap categories. Since these funds are highly concentrated, they remain to be very volatile and hence only aggressive investors should watch this counter. Do follow due diligence before making investment decisions.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent are commendation to buy or sell stocks or MF.