Mutual funds are a good route of investment for investors who are not that much stock-savvy and with a focused and disciplined investment approach, via this investment vehicle one can target the varied financial goals. So, here are given some of the best focused fund recommendations by ICICI Direct for aggressive long term investors for higher returns:
What are focused funds?
Focused fund are equity mutual funds which follow a more concentrated approach in investment i.e. limited number of stocks make up their portfolio. So, this way the fund may outperform its benchmark and even its peer schemes.Nonetheless, the downside risk for these funds is also higher as their portfolio is not much diversified.
Further as per SEBI guidelines, the focused funds can be invested across market capitalization i.e. fund can invest into small, medium as well as large cap stocks with a cap on the number of stocks in the scheme at 30. Also, equity portfolio in the fund has to be up to 65% atleast
Who should invest in focused equity funds?
Focused category of equity mutual funds is certainly not for the novice mutual fund investor but typically should be targeted at by a discerning investor with a considerable risk appetite. Also, typically this set of equity funds for higher return enough to beat inflation as well as other fixed instruments should be pocketed only by those investors who have a longer term horizon of say 7-10 years.
Best Focused Equity Funds To Invest In India 2021
|Focused fund||Rating||NAV as on June 21||1-yr return in %||3-yr return in %||5-yr return in %|
|Axis Focused 25G||CRISIL 3-star rated fund||41.09||53.02||14.34||17.72|
|SBI Focused Equity-G||CRISIL 4-Star rated fund||207.91||52.71||16.01||16.87|
|IDFC Focused Equity Reg-G||CRISIL 2-Star rated fund||49.05||45.29||7.59||13.6|
|Tata Focused Equity Fund Reg-G||NA||13.35||59.22%|
1. Axis Focused 25G
This focused fund from the Axis mutual fund house commands a sizeable AUM of Rs. 16,540 crore. The fund is categorized as a very high risk fund and carries an expense ratio of 1.83 percent. Of the total corpus, fund is majorly invested into large caps with only a small portion into mid-caps.
Over a 1-year period, the fund has underperformed the benchmark index Nifty 50 TRI. SIP in the fund can be started for as less as Rs. 500.
Rs. 10000 monthly SIP started 3 years back in the fund is now worth Rs. 5.06 lakh. The fund's top holdings comprise Bajaj Finance, Kotak Mahindra Bank, TCS, Avenue Supermarts, Pidilite Industries, HDFC, Info Edge (India) and Divi's Lab.
2. SBI Focused Equity-G
The fund is placed in the moderate risk category and carries an expense ratio of 1.79% as against the category average of 2.24%. The fund is invested into large, mid and small cap stocks. The fund's benchmark is S&P BSE 500 TRI.
A SIP of Rs. 500 can be started in this SBI focused equity scheme.
Top holdings of the fund include stocks like HDFC Bank, Alphabet, P&G Hygiene, Alphabet Inc, ABB India, Gland Pharma, Avenue Supermarts etc.
Rs. 10000 SIP started 3-years ago in the fund is now worth Rs. 5.16 lakh, while a lump sum investment of Rs. 1 lakh is now Rs. 1.56 lakh.
3. IDFC Focused Equity Reg-G:
Assets under management of the fund are to the tune of Rs. 1455 crore. The risk-o-meter defines the fund to be moderately high on risk, while the expense ratio of the fund is 2.18%. The benchmark of the fund is S&P BSE 500 TRI and during a 1-year time period the fund has underperformed the benchmark with a return of 45.44%.
Rs. 10000 SIP in 3 years time has grown to Rs. 4.71 lakh. An investor can start a SIP in this IDFC focused fund for just Rs. 100.
Top holdings of the fund include ICICI Bank, SBI, Infosys, HDFC Bank, Axis Bank, Federal Bank, UltraTech Cement and M&M Financial Services among others
4. Tata Focused Equity Fund Reg-G
The fund is majorly invested into large cap stocks and carries an expense ratio of 2.16%. The fund as per the risk-o-meter is a high risk investment bet. Minimum SIP amount for the fund is Rs. 150.
Rs. 10000 monthly SIP in 1 year has grown into an amount of Rs. 1.52 lakh.
In March the fund has notified the change in fund manager under Tata mutual fund.
Top holdings of the fund include ICICI Bank, SBI, Infosys, RIL, HDFC bank, HDFC, Bharti Airtel, BPCL etc.
Taxation of equity mutual funds
Typically for the purpose of taxation, those funds are categorized as equity schemes which have an exposure of over 65% into equities. And short term capital gains accrue, if the holding period is less than 1 year, while if it is over 1 year then long term capital gains are realized by an investor.
|Holding period||Gains type||Taxation rate|
|If less than 1 year||STCG||15%|
|If held over 1 year||LTCG over Rs. 1 lakh||10%|
Note long term capital gains up to Rs. 1 lakh in a fiscal year are exempt from tax.