Focused Fund

A “Focused Fund” is an investment fund that concentrates its holdings in a limited number of Securities or sectors, typically aiming to achieve higher Returns through a more targeted investment strategy. This approach allows fund managers to leverage their expertise in specific areas, potentially leading to greater gains but also higher risks due to reduced diversification.

Examples of Focused Funds include:

• Technology Focused Fund: Invests primarily in a select group of tech companies, such as those in software, hardware, or biotechnology.
• Emerging Markets Focused Fund: Concentrates on a limited number of high-growth companies in emerging market economies, like India or Brazil.

Case Study:

The XYZ Focused Growth Fund, which holds only 15 Stocks in its portfolio, achieved a return of 25% over a year, significantly outperforming the broader market Index. However, the fund’s performance can be highly volatile, especially if one of its concentrated holdings underperforms.