The focused mutual funds have the mandate to invest in 30 stocks. The schemes have the freedom to invest across market capitalisations and sectors. The category is typically recommended to aggressive investors who want to bet on a concentrated portfolio. The focused fund category has 25 schemes. The new entrant, Edelweiss Focused Equity Fund, has been in the market for four months only.
Two popular focused fund benchmarks – S&P BSE 500 TRI and Nifty 500 TRI – offered 8.22% and 7.72% respectively till date in this year, according to ACE MF database. In other words, the category has offered lower average returns than its benchmark indices. However, the toppers in the category offered double-digit returns in 2022.
HDFC Focused 30 Fund was the topper among the active focused funds, with around 21.48% returns. Nippon India Focused Equity Fund occupied the second spot. However, the scheme offered only 12.68% returns. Franklin India Focused Equity Fund delivered 12.53% returns in 2022. Quant Focused Fund offered 12.28% returns in 2022. Mahindra Manulife Focused Equity Yojana Fund gave around 11.66%. JM Focused Fund offered around 10.46% returns.
Six focused schemes offered negative returns in 2022. Axis Focused 25 Fund lost around 11.53%. SBI Focused Equity Fund lost around 6.24%. Invesco India Focused 20 Equity Fund lost around 5.56%. Mirae Asset Focused Fund lost around 3.38%. IDFC Focused Equity Fund lost around 1.90%. Lastly, DSP Focus Fund lost around 0.65%.
Edelweiss Focused Equity Fund that has been in the market for four months and offered around 4.67% during the same period.
Out of 25 schemes, eight schemes have beaten their respective benchmark. Around 17 schemes underperformed the benchmark index, including six schemes that delivered negative returns.Active focused fund schemes got inflows worth Rs 11930.09 crore between January and November 2022. These schemes attracted an inflow of Rs 10654.25 crore in 2021.
Source: ACE MF, Returns as on December 14 2022
All focused funds had higher allocations to large cap stocks. The category had around 67% investment in the large cap category. The S&P BSE Sensex delivered around 5.90% returns. The toppers had higher exposure to the banking & finance sector as compared to the category. The schemes also had low exposure to the IT sector. Most toppers had a low exposure in the healthcare sector. These schemes were skewed toward the banking, finance, and automobile sector.
Note, this is not a recommendation list. The exercise is just to review the performance of focused funds in 2022. You need to consider other factors while making investment decisions.
For recommendation: Best focused funds to invest in 2023
