Equity mutual funds save the investor from the hassle of selecting reliable stocks to build a reliable investment portfolio. These funds invest in various securities and all an investor has to do is decide an amount and invest in equity funds whose investment objective aligns with theirs. Equity funds hold stocks in their portfolio in a predetermined proportion. The decision is taken by the fund manager actively managing the portfolio and AUM of the fund. AUM or Assets Under Management is the total value of assets of a particular mutual fund scheme.
There are times when diversifying investments across different sectors and companies may limit the fund’s performance as all of them may not outperform at the same time. If one has a strong feeling that a particular sector or industry has the potential to outperform, he or she usually tries to increase their portfolio’s exposure to that particular sector.
As per SEBI guidelines, focused funds should limit their portfolio allocation to a maximum of 30 stocks. Nevertheless, these funds are not restricted to a specific market cap and hence, can invest in stocks of small cap, mid cap, as well as large cap companies. Nor are they sector specific, meaning that focused funds can invest in stocks related to any sector or industry.
Understanding Focused Funds
One thing is clear,
concentrated wealth
Invest in a portfolio of stocks not exceeding 30 in number. If you take a look at other equity funds, some may have market cap restrictions while others may limit their portfolio to a specific sector or industry. However, such equity funds are not bound to invest in a fixed number of shares and may include a wide range of shares as per the investment objective and the prevailing market scenario. A concentrated fund may offer a concentrated portfolio as it consists of up to 30 stocks, but this equity fund works on a strategy where it invests in only a small amount of stocks instead of diversifying its assets across a large number of stocks like other equity funds. Targets quality stocks.
Features of Focused Funds
In focused funds, the money is allocated only to specific stocks. This can prove to be an advantage compared to
equity fund Those who diversify across a large number of stocks. In the contemporary market scenario, all the stocks may not perform at the same time. Investing in a focused portfolio of carefully analyzed and curated stocks such as focused funds can prove beneficial for investors in the long run.
As mentioned earlier, focused funds can invest in any company. They have the option of investing in stocks belonging to companies from various sectors and industries spread across market capitalization. The fund manager decides what percentage of the portfolio should be invested in small, mid and large cap markets. There is no restriction and keeping in mind the market sentiment, the fund manager can consider which stocks to invest in.
“This is an investor education and awareness initiative by Axis Mutual Fund. Investors need to complete a one-time KYC process. For more details visit www.axismf.com or contact us at [email protected]. Investors should only Should deal with registered mutual funds, details of which are available at www.sebi.gov.in – INTERMEDIARIES/MARKET INFRASTRUCTURE INSTITUTIONS section. For any grievance redressal, investors may call us at 1800 221 322 or write to us at customerservice@ axismf.com or register a complaint on SEBI Scores Portal https://scores.gov.in.