Ruchi SrivastavaInvestors in mutual funds often believe that holding a concentrated portfolio is necessary to achieve better returns. They believe that many mutual fund schemes deliver only average returns due to their highly diversified portfolios. As a result, such investors might prefer investing in focused mutual fund schemes instead.
With the start of the 2025 financial year, many investors are rebalancing their portfolios to capitalize on market trends and the ongoing economic recovery. This April, focused mutual funds are emerging as a popular investment choice.
What are Focused Mutual Funds?
Focused mutual funds are a type of equity mutual fund that invests in a concentrated portfolio of up to 30 stocks, as permitted by SEBI regulations. Unlike diversified funds that spread their investments widely, these funds focus on a smaller number of stocks based on strong conviction.
Key highlights:
- Limited to 30 stocks or fewer
- Flexible to invest across all sectors and market capitalizations
- Designed to generate higher returns through focused investing
- Come with greater risk if stock selections don’t perform well
Top Focused Mutual Funds to Consider in April 2025
1. 360 ONE Focused Equity Fund
Fund Overview
Fund Name: 360 ONE Focused Equity Fund
Asset Management Company: 360 ONE Mutual Fund (previously known as IIFL Mutual Fund)
Fund type: Open-ended equity scheme with a focused investment approach
Benchmark Index: S&P BSE 500 Total Return Index
Launch Date: October 30, 2014
Risk Category: Very High
Performance Highlights
Returns:
- 1-Year: 2.85%
- 3-Year: 14.66%
- 5-Year: 21.06%
- Since Inception: 14.88%
Fund Management
- Fund Manager: Mayur Patel (since November 2019)
- Co-Fund Manager: Rohit Vaidyanathan
Risk & Return Metrics
- Standard Deviation: 13.287
- Beta: 0.94
- Sharpe Ratio: 0.83
2. SBI Focused Equity Fund
Fund Overview
Fund Name: SBI Focused Equity Fund
Asset Management Company: SBI Mutual Fund
Fund Type: Open-ended equity investment plan
Launch Date: October 11, 2004
Benchmark Index: BSE 500 TRI (Total Return Index)
Objective: Aims to deliver long-term capital growth by investing in a select portfolio of equity and equity-related instruments spanning various market capitalizations.
Performance Highlights as of (Mar 2025)
NAV (Regular Plan – Growth): ₹42.17
Returns:
- 1-Year: 2.19%
- 3-Year: 16.35%
- 5-Year: 18.52%
- Since Inception: 14.99%
Fund Management
- Fund Managers:
- R. Srinivasan (since May 2009)
- Pradeep Kesavan (since December 2023)
Risk & Suitability
- Risk Category: Very High (as indicated by SEBI’s Riskometer)
- Best Suited For: Investors comfortable with high risk who are aiming for long-term capital growth through a focused equity investment approach.
3. Sundaram Focused Fund
Fund Overview
Fund Name: Sundaram Focused Fund
Managed By: Sundaram Mutual Fund
Category: Open-ended equity scheme with a focused investment strategy
Launch Date: November 11, 2005
Benchmark Index: NIFTY 500 TRI (Total Return Index)
Risk Level: Very High
Fund Managers: Ashwin Jain and S. Bharath
Performance Highlights (as of April 11, 2025)
NAV (Direct Plan – Growth): ₹144.62
Returns:
- 1-Year: -0.52%
- 3-Year CAGR: 10.15%
- 5-Year CAGR: 21.45%
- Since Inception CAGR: 14.29%
Risk & Return Metrics (as of March 2025)
- Standard Deviation:
- 1-Year: 13.12%
- 3-Year: 13.87%
- 5-Year: 14.92%
- Beta:
- 1-Year: 0.75
- 3-Year: 0.89
- 5-Year: 0.91
- Sharpe Ratio:
- 1-Year: -0.03
- 3-Year: 0.44
- 5-Year: 1.14
Suitability
This fund is well-suited for investors who:
- Plan to invest for at least 3 years or longer
- Aim for long-term capital appreciation by investing in a selective equity portfolio
- Are comfortable with the high market fluctuations typical of focused equity strategies
4. Quant Focused Fund
Fund Overview
Fund Name: Quant Focused Fund
Category: Open-ended focused equity scheme
Fund Provider: Quant Mutual Fund
Launch Date: January 1, 2013
Benchmark: NIFTY 500 TRI (Total Return Index)
Risk Level: Very High
Managed By: Sanjeev Sharma
Performance Highlights (as of April 15, 2025)
NAV (Direct Plan – Growth): ₹87.92
Returns:
- 1-Year: -7.69%
- 3-Year CAGR: 12.84%
- 5-Year CAGR: 25.91%
- 10-Year CAGR: 14.10%
- Since Inception CAGR: 16.91%
Risk & Return Overview (as of March 2025)
- Standard Deviation:
- 1-Year: 13.12%
- 3-Year: 13.87%
- 5-Year: 14.92%
- Beta (Volatility Relative to Market):
- 1-Year: 0.75
- 3-Year: 0.89
- 5-Year: 0.91
- Sharpe Ratio (Risk-Adjusted Return):
- 1-Year: -0.03
- 3-Year: 0.44
- 5-Year: 1.14
Suitability
This fund is appropriate for investors who:
- Have a long-term investment outlook of 5 years or more
- Are looking to grow their capital through a focused equity strategy
- Are comfortable with the high volatility that comes with concentrated equity portfolios
Why Should You Invest in Focused Equity Mutual Funds?
As per SEBI guidelines, focused equity mutual fund schemes are allowed to invest in a maximum of 30 stocks. Unlike many other fund categories, they come with no limitations on market capitalization or sector allocation, much like flexi cap schemes. This gives fund managers the freedom to invest across the board, based purely on their convictions. If that kind of investment flexibility interests you, focused equity funds may be worth exploring.
Focused equity funds invest in a limited number of stocks, allowing fund managers to take high-conviction bets. This can lead to strong returns if their picks work out—but poor choices can hurt performance significantly. The same applies to their sector and market-cap calls. These funds suit investors with a high risk appetite and a long-term horizon of at least seven years. Check out our latest recommendations and follow monthly updates to track performance.
Final Thoughts
Focused mutual funds aren’t suited for cautious investors, but for those who can handle market ups and downs, they offer the potential for strong long-term gains. As of April 2025, the market environment favors investors looking to capitalize on India’s growth through a concentrated investment strategy. Be sure to consult your financial advisor before investing to confirm the fund aligns with your overall portfolio strategy.
Sources: msn.com
