One of the key factors to judge the performance of a mutual fund scheme, and even a fund category, is to compare its returns with those of other schemes. Here we analyse the returns of focussed funds and evaluate their returns for past one and three years.
While some of the fund schemes gave muted returns i.e., in single digits, some of the fund schemes posted high returns up to 18 to 20 percent consistently in the past three years.
What are focussed funds?
Focused funds are a type of equity fund that invests in a limited number of stocks. As per Security and Exchange of India (SEBI) guidelines, a focused fund scheme can invest in a maximum of 30 stocks. Also, the capital markets regulator has prescribed minimum investment in equity and equity related instruments by focussed fund schemes as 65 percent of total assets.
Focused mutual fund investments are seen good for experienced investors instead of new investors. They are considered volatile funds, and hence only those investors who are looking for safe havens are advised to consider other options.
One key disadvantage of focused fund is that investing only in a few stocks leads to lack of healthy diversification, and the losses can be higher than usual.
One-year returns
The top-performing focussed funds, in the past one year, include Canara Robeco Focused Equity Fund that gave a return of 11.72 percent, HDFC Focused 30 Fund with 22.30 percent return, ICICI Prudential Focused Equity Fund with 11.87 percent, and Mahindra Manulife Focused Equity Yojana with 13.66 percent return.
These are direct mutual fund returns as on May 31, 2022, according to the AMFI (Association of Mutual Funds in India) data.
| Focused fund scheme | Three-year-returns (%) |
| Mirae Asset Focused Fund | 20.41 |
| Quant Focused Fund | 19.46 |
| IIFL Focused Equity Fund | 19 |
| ICICI Prudential Focused Equity Fund | 16.69 |
(Source AMFI; data as on May 31, 2022)
Three-year-returns
The top performing three-year returns of focussed funds were given by Mirae Asset Focused Fund with 20.41 percent return, Quant Focused Fund with 19.46 percent return, IIFL Focused Equity Fund with 19 percent return, ICICI Prudential Focused Equity Fund with 16.69 percent return and Sundaram Focused Fund with 16.40 percent return.
Snapshot of top performing focussed fund schemes:
I. Mirae Asset Focused Fund: The fund scheme was launched in May 2019. The CAGR of the scheme since inception is 19.01 percent. This means an investment made of ₹1,00,000 made three years ago would have grown to ₹1,68,558.
The top holdings of the fund include HDFC Bank, ICICI Bank, Infosys, RIL, SBI, Axis Bank, Bharti Airtel, Ashok Leyland, among others.
II. Quant Focused Fund: Quant Focused Fund was launched in August 2008. Its return since the scheme’s inception was 13.32 percent. This means an investment of ₹one lakh invested in the scheme then would have now grown to ₹5,63,950.
The top holdings of this scheme include Adani Enterprises, Vedanta, Adani Ports, ITC, ICICI Bank, IRB Infra, SBI and Ruchi Soya.
III. IIFL Focused Equity Fund: This scheme was launched on October 30, 2014. Its return since inception was 13.25 percent. This means an investment of ₹one lakh in the scheme would have swelled to ₹2,58,232 by now.
The top holdings of the scheme include ICICI Bank, HDFC Bank, Infosys, Bharti Airtel, L&T, SBI, Axis Bank and SRF.