Focused equity funds are generally grouped under the flexicap category. As the name suggests, focused funds invest in fewer stocks than regular diversified schemes and therefore have concentrated portfolios. Usually, these funds invest in about 25 to 30 stocks, with the top few accounting for a significant part of the exposure. Now, focused funds have had a robust run over the past one year and have outperformed schemes from many other equity categories. Because they hold concentrated portfolios, these schemes hold cash to the tune of 5-9 percent of their assets, to shield themselves in volatile times and also to jump in when an investment opportunity presents itself. Here are the top five focused equity funds in terms of returns generated in the last one year.
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Nippon India Focused Equity Fund tops the list with 79.9 percent returns in the last one year, according to data from Valueresearch. The scheme manages assets worth Rs 5.818 crore. Its expense ratio for the direct plan is 1.32 percent. Financial stocks are the fund's top sector holdings. Most other segments such as services, FMCG and construction account for less than 10 percent of the scheme's portfolio.
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The house may be facing the heat on the debt funds front. But Franklin India Focused Equity Fund has done quite well over the last one year, delivering 79.8 percent returns. It manages Rs 7,836 crore worth of assets and charges an expense ratio of 1.12 percent. In addition to heavy exposure to financial stocks, the scheme has allocated significantly to sectors such as construction and energy.
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HDFC Focused 30 has delivered 78.5 percent returns over the past one year. The scheme has assets under management of Rs 838 crore. It charges 1.37 percent as expense ratio. Compared to other focused schemes mentioned here, this fund holds more cash, 8-9 percent.
ICICI Prudential Focused Equity Fund comes next, with 69.5 percent returns in the last one year. It manages assets of Rs 2,256 crore and charges a low expense ratio of 0.81 percent for its direct plan. In addition to the segments that other focused funds have invested in, this scheme has high exposure to technology stocks.
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SBI Focused Equity Fund has delivered 67.7 percent returns in the last one year. It is one of the largest schemes in the category with assets of Rs 20.372 crore. The expense ratio is 0.72 percent. The fund has placed significant bets on FMCG and healthcare sectors, in addition to financial stocks and other segments.
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These funds are not our recommendations. But for those comfortable with concentrated portfolios, focused funds can be good additions. Check for consistency in performance across timelines and market conditions, fund house and manager pedigrees, your risk appetite and time horizon before investing in any scheme. You can consult an advisor or go through our MC30 fund list to zero in on the best schemes.
