What is a focused mutual fund?

A focused fund is a mutual fund that invests and holds in a small number of stocks or bonds in a limited number of sectors.

 

According to the Securities and Exchange Board of India’s (Sebi’s) definition, focussed funds cannot hold more than 30 stocks in their portfolios.

 

Unlike other funds, focused MFs generally follow a multi-cap mutual fund approach, possess the potential to create wealth in the long term and minimises the risk of over-diversification.

Focused funds, also referred to as ‘best idea funds’, deal with small-cap, mid-cap and large-cap funds.

 

Why invest in focused MF?

 

The core aim of the fund managers of