5 things you should know about focused equity mutual funds

1. Focused funds are a type of equity funds that invests in a limited number of stocks—not more than 30.

2. Not more than 10% of the portfolio is allocated to a single stock.

3. The investment universe can be any particular market capitalisation oriented like large or mid or small or market cap agnostic.

Also read: How mutual fund investments are taxed

4. The objective of such funds is to deliver high returns by investing in companies with growth potential.

5. With larger exposure to individual stocks, the volatility is higher making it riskier than a diversified equity fund.

Also read: How long-term investors should deal with market volatility

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)