ET SpotlightAs of 31st March 2022
Equity mutual funds save the investor from the trouble of handpicking credible stocks to build a rewarding investment portfolio. These funds invest in various securities and all the investor has to do is decide on a sum and invest in equity funds whose investment objective aligns with that of theirs. Equity funds hold stocks in a predetermined proportion in their portfolio. The decision is made by the fund manager actively managing the portfolio and the fund’s AUM. AUM or Asset Under Management is the total value of the assets of a particular mutual fund scheme.
There are times when diversifying investments across various sectors and companies can limit a fund’s performance as not all of them can outperform at the same time. If one has a strong feeling that a particular sector or industry has the potential to outperform, one usually tries to increase their portfolio exposure to that particular sector.
As per SEBI guidelines, focused funds must limit their portfolio allocation to a maximum of 30 stocks. Nevertheless, these funds are not confined to a specific market cap and hence, can invest in stocks belonging to small cap, mid cap, as well as large cap companies. Neither are they sector specific, which means that focused funds can invest in stocks belonging to any sector or industry.
Understanding Focused Funds
One thing is clear, focused funds invest in a portfolio of stocks not exceeding the count of 30. If you take a look at other equity funds, some may have market cap restrictions while others may confine their portfolio to a specific sector or industry. However, such equity funds do not have the obligation to invest in a defined number of stocks and can include a wide range of stocks as per the investment objective and the existing market scenario. A focused fund may offer a concentrated portfolio as it comprises a maximum of 30 stocks, but this equity fund works on a strategy where it only targets quality stocks rather than diversifying its assets across a large number of stocks like other equity funds.
Features of Focused Funds
In focused funds, the money is allocated only to specific stocks. This may prove to be an advantage as compared to equity funds that diversify across a large number of stocks. In a contemporary market scenario, all stocks may not perform at the same time. Investing in a concentrated portfolio of carefully analyzed and curated stocks such as that of a focused fund may prove to be rewarding 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 of various sectors and industries spread across market capitalizations. The fund manager decides how much percentage of the portfolio must take exposure to the small, mid, and large cap markets. There are no restrictions and keeping in mind market sentiment, the fund manager may consider what stocks to invest in.
Axis Focused 25 Fund
An open ended equity scheme investing in maximum 25 stocks investing in large cap, mid cap and small cap companies
Investment objective
To generate long term capital appreciation by investing in a concentrated portfolio of equity and equity related instruments of up to 25 companies.
Benefits
This product is suitable for investors who are seeking*
Capital appreciation over the long term.
Investment in a concentrated portfolio of equity and equity related instruments of up to 25 companies *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
UTM: https://bit.ly/3SGzRFu
Equity mutual funds save the investor from the trouble of handpicking credible stocks to build a rewarding investment portfolio. These funds invest in various securities and all the investor has to do is decide on a sum and invest in equity funds whose investment objective aligns with that of theirs. Equity funds hold stocks in a predetermined proportion in their portfolio. The decision is made by the fund manager actively managing the portfolio and the fund’s AUM. AUM or Asset Under Management is the total value of the assets of a particular mutual fund scheme.
There are times when diversifying investments across various sectors and companies can limit a fund’s performance as not all of them can outperform at the same time. If one has a strong feeling that a particular sector or industry has the potential to outperform, one usually tries to increase their portfolio exposure to that particular sector.
As per SEBI guidelines, focused funds must limit their portfolio allocation to a maximum of 30 stocks. Nevertheless, these funds are not confined to a specific market cap and hence, can invest in stocks belonging to small cap, mid cap, as well as large cap companies. Neither are they sector specific, which means that focused funds can invest in stocks belonging to any sector or industry.
Understanding Focused Funds
One thing is clear, focused funds invest in a portfolio of stocks not exceeding the count of 30. If you take a look at other equity funds, some may have market cap restrictions while others may confine their portfolio to a specific sector or industry. However, such equity funds do not have the obligation to invest in a defined number of stocks and can include a wide range of stocks as per the investment objective and the existing market scenario. A focused fund may offer a concentrated portfolio as it comprises a maximum of 30 stocks, but this equity fund works on a strategy where it only targets quality stocks rather than diversifying its assets across a large number of stocks like other equity funds.
Features of Focused Funds
In focused funds, the money is allocated only to specific stocks. This may prove to be an advantage as compared to equity funds that diversify across a large number of stocks. In a contemporary market scenario, all stocks may not perform at the same time. Investing in a concentrated portfolio of carefully analyzed and curated stocks such as that of a focused fund may prove to be rewarding 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 of various sectors and industries spread across market capitalizations. The fund manager decides how much percentage of the portfolio must take exposure to the small, mid, and large cap markets. There are no restrictions and keeping in mind market sentiment, the fund manager may consider what stocks to invest in.
Axis Focused 25 Fund
An open ended equity scheme investing in maximum 25 stocks investing in large cap, mid cap and small cap companies
Investment objective
To generate long term capital appreciation by investing in a concentrated portfolio of equity and equity related instruments of up to 25 companies.
Benefits
- The scheme invests in a concentrated portfolio of high conviction ideas (up to 25).
- Focus on companies that have the capability to sail through their business cycles without being affected by short term market volatility.
- While this fund offers the benefit of higher exposure to the best ideas, the portfolio is well diversified across sectors to manage risk.
- Asset Class benefit- Equity as an asset class holds the potential to beat inflation and generate long term wealth.
- Target Goals - Long-term goals such as children's education and their future, retirement, or any other long term growth that needs a wealth creation plan.
This product is suitable for investors who are seeking*
Capital appreciation over the long term.
Investment in a concentrated portfolio of equity and equity related instruments of up to 25 companies *Investors should consult their financial advisers if in doubt about whether the product is suitable for them
Mutual Fund Investments are subject to market risks, read all scheme related documents carefully.
UTM: https://bit.ly/3SGzRFu
(This article is generated and published by ET Spotlight team. You can get in touch with them on etspotlight@timesinternet.in)
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