Without being harsh, these funds may be too focused on one type of stock
31-May-2023 •Ashish Menon
Although focused funds can't invest in more than 30 company stocks, they have the flexibility to invest in companies of all sizes (large-, mid- and small-cap stocks).
And yet, despite all the freedom, five funds have invested more than four-fifth of their cash in large-cap stocks alone, between January 1, 2018, and April 30, 2023.
Granted, large-caps add relative reliability to your returns, but a focused-cap fund should also ideally scan the mid- and small-cap universe to add that extra zing to investors' returns.
If not, these funds could and should very well be labelled as a 'large-cap fund' instead.
To rub salt into the wound, these five funds haven't performed well either. Between January 1, 2018, and April 30, 2023, they fell short of the Sensex's 13 per cent returns.
|Fund name||Average allocation to large caps (%)||Performance with regards to the Sensex (%)|
|Aditya Birla Sun Life Focused Equity Fund||89.5||-3.3|
|Axis Focused 25 Fund||87||-4.5|
|DSP Focus Fund||81.1||-5.2|
|ICICI Prudential Focused Equity Fund||80.8||-0.6|
|JM Focused Fund||90.7||-5.5|
Suggested read: Four flexi-cap funds in disguise?