If you are keen to get an exposure to equity via mutual funds and want to play a slightly higher risk, then you could consider investing in what are known as ‘focused mutual funds’.
While most of us opt for the conventional equity funds such as large caps, mid caps and small caps, some investors contemplate going beyond the obvious. Let us first understand what exactly focused mutual funds are.
Focused mutual funds
These refer to those funds which invest in a limited number of stocks (maximum being 30) with at least 65% funds allocated to equity and equity-related instruments. It’s not a very popular category, and currently, there are 28 schemes in this category with total assets under management (AUM) amounting to ₹1.74 lakh crore (as per data as on 30 November 2025).
With the assets locked in a select few stocks only, these funds are naturally riskier than other equity funds, which have greater flexibility across stocks (e.g., large cap) and across market cap (e.g., flexi cap funds).
Why should you invest in focused funds?
There could be several reasons to invest in focused mutual funds. Some opt for them because they have a higher conviction in a few concentrated stocks. Alternatively, if someone wants to avoid diversification across too many stocks, one could also explore investing in focused funds.
Additionally, one could invest in them for the want of better options after investing in the other equity funds, i.e., large cap and flexi cap, etc.
Meanwhile, you don’t need to allocate a portion of your portfolio to focused funds.
Alekh Yadav, Head of Investment Products, Sanctum Wealth, reasons, “Investors should evaluate focused equity funds in the same manner as any other mutual fund—by assessing the fund manager’s track record, investment strategy, consistency of performance, and behaviour across market cycles. The key distinction is the concentrated nature of focused funds, which can result in relatively higher volatility and stock-specific risk. If a focused fund meets standard evaluation criteria and aligns with the investor’s risk profile, a limited allocation may be considered. However, there is no specific or mandatory need to allocate to focused funds.”
These are some top performing focused mutual funds
Some high performing, focused mutual funds which have delivered over 19% annualised return in the past three years include HDFC Focused Fund and Invesco India Focused Fund. See the table below for the entire list
(Source: AMFI; 3-year returns as on 2 January 2026)
As we can see in the table above, there are around half a dozen mutual fund schemes which have delivered over 19% annualised return in the past three years, including Bandhan Focused Fund and Mahindra Manulife Focused Fund.
Note: This story is for informational purposes only. Please speak to a SEBI-registered investment advisor before making any investment-related decision.
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