- Summary
- Focused mutual funds are those in which a portfolio of a maximum of 30 shares is invested. Some of the top focused mutual funds in 2026 are Invesco India Focused Fund, ICICI Prudential Focused Equity Fund, and HDFC Focused Fund.
- These funds can offer long-term growth potential but carry higher risk. They might be appropriate for those who have high risk tolerance and a minimum investment horizon of 5 years.
- Before investing, perform a thorough analysis of returns, expense ratio, benchmark, portfolio concentration, fund manager, and investment risks. SIPs are good for disciplined investing, while direct plans are good for reducing costs.
The focused funds are equity funds that are supposed to allocate funds in a select portfolio of stocks. As per the SEBI rules on focused funds, the total number of stocks held by any focused mutual fund is a maximum of 30 stocks, with at least 80% in equity and equity-related instruments.
Some of the main schemes for the year 2026 include HDFC Focused Fund, ICICI Prudential Focused Equity Fund, Invesco India Focused Fund and SBI Focused Fund.
Below is the detailed description of focused mutual funds:
| Type | Investment Approach |
| Large-cap focused funds | Concentrate mainly on established large companies while maintaining a limited portfolio |
| Multi-Cap focused funds | Select high-conviction stocks across large, mid, and small-cap companies |
| Large and Mid-cap focused funds | Focus on selected companies from large-and-mid-cap segments |
Focused mutual funds may be appropriate for those who wish to create wealth in the long-term and are willing to take the high volatility of the market into consideration. This type of fund is suitable for investors whose investment horizon is five years or more and who are willing to take market fluctuations.
There is a possibility that investors will face concentration risk while managing their funds since any drastic drop in the price of the securities held by them can have a greater impact on their fund than in the case when the portfolio was diversified.
Best 10 Focused mutual funds: Quick comparison
The following table provides a quick comparison of the selected focused mutual funds ranked based on AUM as of 17th August, 2026
| Fund Name | 3 Yr CAGR | 5 Yr CAGR | Benchmark 5 Yr Return | AUM | Expense ratio | Minimum SIP | Risk |
| SBI Focused Fund | 15.93% | 13.83% | 14.80% | ₹ 47274 Cr | 0.64% | ₹ 500 | Very High |
| HDFC Focused Fund | 17.04% | 19.71% | 14.80% | ₹ 27303 Cr | 0.61% | ₹ 100 | Very High |
| ICICI Prudential focused equity fund | 18.22% | 17.41% | 14.80% | ₹ 17012 Cr | 0.57% | ₹ 100 | Very High |
| Nippon India Focused fund | 11.37% | 12.31% | 12.43% | ₹ 8531 Cr | 0.96% | ₹ 100 | Very High |
| Invesco India Focused Fund | 21.93% | 16.54% | 14.80% | ₹ 5707 Cr | 0.50% | ₹ 100 | Very high |
| DSP Focused fund | 14.61% | 11.76% | 14.80% | ₹ 2601 Cr | 0.80% | ₹ 100 | Very High |
| Mahindra Manulife Focused Fund | 15.74% | 15.90% | 14.80% | ₹ 2198 Cr | 0.42% | ₹ 500 | Very High |
| Tata Focused Fund | 11.78% | 12.25% | 14.80% | ₹ 1760 Cr | 0.61% | ₹ 100 | Very High |
| HSBC Focused fund | 16.82% | 12.81% | 13.75% | ₹ 2785 cr | 0.62% | ₹ 100 | Very High |
| Aditya Birla Sun life Focused fund | 13.75% | 12.53% | 14.80% | ₹ 7855 Cr | 0.77% | ₹ 100 | Very High |
Top 10 Focused mutual funds in India
The following focused mutual funds analysis covers performance, costs, risk, benchmark and portfolio concentration.
1. SBI Focused Fund Direct Plan
The fund delivered a three-year annual return of 15.93%. The scheme is one of the largest with an AUM of around ₹ 47,274 crore in this segment of focused funds. The expense ratio is 0.64%, and the benchmark for the scheme is BSE 500 TRI.
It seeks to create long-term growth through a concentrated portfolio of equities and equity-related securities. The minimum amount that investors can invest initially is ₹ 5,000, while ₹ 500 is for SIPs.
- Strengths: Large AUM, experienced scheme, good performance and 4-star rating.
- Drawbacks: Higher initial investment requirement relative to competitor funds.
2. HDFC Focused Fund Direct Plan
The third five-star mutual fund scheme is HDFC Focused Fund, which earned a three-year annualised return of 17.04% against the expense ratio of 0.61%. The AUM of the scheme is estimated at ₹ 27,303 crore as of June 30, 2026. NIFTY 500 TRI is the benchmark of the fund.
The main purpose of the scheme is to generate long-term gains by investing in equity and equity-related stocks of 30 companies. The minimum investment and the minimum SIP for the scheme are ₹ 100 each.
- Strengths: Five stars, high AUM, low minimum investment, and low expense ratio.
- Drawbacks: It is still highly concentrated, and a very high risk rating suggests that the losses can be substantial.
3. ICICI Prudential Focused Equity Fund Direct Plan
ICICI Prudential Focused Equity Fund received 5 stars and gave 3-year annualised returns of 18.22%. The expense ratio for this fund is 0.57%, whereas AUM was around ₹ 17,012 crore as of June 30, 2026. The benchmark index for this scheme is BSE 500 TRI.
The top holdings in this fund include ICICI Bank, Axis Bank, HDFC Bank, TVS Motor and Mphasis. The 5-year annualised returns for this fund are 17.41% until July 27, 2026. The minimum investment for this fund is ₹ 500, and the minimum SIP is ₹ 100.
- Strengths: Good performance and 5-star rating.
- Drawbacks: Very high risk level makes it unfit for people not willing to face market ups and downs.
4. Nippon India Focused Fund Direct Plan
The scheme has been in operation for several years since its inception date, which is very far back in 2006. But this scheme was merged, and the restructured scheme became Nippon India Focused Fund, effective from 28 April, 2018, and the annualised return over three years up to July 31, 2026, was 11.37%. The expense ratio was at 0.96%, and the asset under management was ₹ 8,530 crore as of July 31, 2026.
It invests in equity shares of 30 companies of varying market capitalisation. Some of the stocks that it has included in the portfolio are ICICI Bank, HDFC Bank, Axis Bank, Eternal and Infosys, amongst others. Five-year annualised return is 12.31% as of July 28, 2026.
- Strengths: Long operating history and established portfolio.
- Drawbacks: High expense ratio and lower recent returns as compared with leading funds in this selection.
5. Invesco India Focused Fund Direct Plan
What makes Invesco India Focused Fund a remarkable fund is its recent performance and the low cost. The three-year annualised return of the fund was 21.93%. The fund had an asset under management of around ₹ 5,707 crore and an expense ratio of 0.50% as at June 30, 2026. Its benchmark index is BSE 500 TRI.
This fund holds up to 30 stocks across various market capitalisations. It held such major stocks as ICICI Bank, Larsen & Toubro, HDFC Bank, InterGlobe Aviation and Nuvama Wealth Management. The minimum investment amount in the fund is ₹1,000, while the minimum SIP is ₹ 100.
- Strengths: Good return, low expense ratio and diversified market capitalisation.
- Drawbacks: The fund is rated as Very High risk.
6. DSP Focused Fund Direct Plan
The annual return for DSP Focused Fund was 14.61%. The expense ratio stood at 0.80% whereas AUM stood at around ₹ 2,601 crore as of June 30, 2026. The fund takes its benchmark as BSE 500 TRI.
The fund holds mostly companies which have a market capitalisation among the top 200 in India. The major holdings in the fund include HDFC Bank, ICICI Bank, Axis Bank, The Phoenix Mills and Bharti Airtel.
- Strengths: Minimum investment of ₹ 100, SIP option, a well-known fund house and diversification in a focused portfolio.
- Drawbacks: The fund has a lower rating compared to the HDFC and ICICI Prudential focused funds.
7. Mahindra Manulife Focused Fund Direct Plan
Mahindra Manulife Focused Fund offered an annualised return of 15.74% over three years. The expense ratio of the plan was merely 0.42%, which was the lowest expense ratio among the selected schemes. The AUM was around ₹ 2,198 crore.
The annualised return on a five-year basis as of July 26, 2026, was 15.90%. Its benchmark index was NIFTY 500 TRI. The minimum investment amount was ₹ 1,000, and the minimum SIP was ₹ 500.
- Strengths: Lowest expense ratio, good past performance, and 4-star rating.
- Drawbacks: It has less history than many other older-focused funds and is Very High risk.
8. Tata Focused Fund Direct Plan
Tata Focused Fund offered an annualised return of 11.78% for the last three years . Its expense ratio stood at 0.61%, and AUM was around ₹ 1,760 crore. The benchmark of the fund is NIFTY 500 TRI.
The fund may invest in a maximum of 30 stocks irrespective of the market cap. Top stock holdings of the fund include HDFC Bank, ICICI Bank, Axis Bank, Reliance Industries and Samvardhana Motherson.
- Strengths: Low expense ratio and focused investment mandate.
- Drawbacks: It offers a lower three-year return compared to other funds on the selected list.
9. HSBC Focused Fund Direct Plan
HSBC Focused Fund has achieved an annualised return of 14.47% over the past three years. The expense ratio is 0.79% while the AUM as of June 30, 2026 is about ₹ 1,723 crore. The benchmark for this fund is NIFTY 500 TRI.
The main investments in this fund are in ICICI Bank, HDFC Bank, Shriram Finance, Larsen & Toubro and Nippon Life AMC. The minimum investment is ₹ 5,000, whereas the minimum SIP is ₹ 500.
- Strengths: Good costs and diversified investments among large-cap firms.
- Drawbacks: Low AUM and short duration of the scheme.
10. Aditya Birla Sun Life Focused Fund Direct Plan
The annualised return of this fund for the past three years was 13.75%, and it had a 3-star rating. The expense ratio of this fund is 0.77%, and its AUM as of June 30, 2026, is ₹ 7,855 crore. This fund has an index benchmark of NIFTY 500 TRI.
The key companies that were its holdings include ICICI Bank, Reliance Industries, Shriram Finance, Infosys, and Axis Bank. The minimum amount of investment in this scheme is ₹ 1,000, whereas SIP can start from ₹ 100.
- Strengths: Reliable company, market capitalisation range, and low SIP.
- Drawbacks: It does not have the best recent returns among the funds discussed above.
How did we select focused mutual funds?
The following criteria were used to select the focused mutual funds. We tried to make a balanced comparison and not just evaluate the funds based on their past performance.
- Past Performance: Three years annualised performance was taken into consideration for evaluating the past performance of the funds.
- Expense ratio: Lower expense ratios were given importance because expenses can have an impact on future returns.
- Quality of Portfolio: The reviewed top holdings and level of portfolio concentration.
- Degree of risk: As focused funds carry a high degree of market risk, this was taken into account while selecting the fund.
- Benchmark: The benchmark of the fund was identified for making a fair performance comparison.
- Investment requirement: Minimum investment requirement and SIP amount were taken into consideration.
Focused mutual funds Vs Other funds
Focused mutual funds are different from diverse groups of funds since their portfolios are intentionally concentrated. Flexi cap funds are able to invest in any size of companies; however, they do not have the same mandate for concentration. Large cap funds are usually focused on big companies, whereas mid-cap and small-cap funds are market-cap-specific.
| Category | Main Investment Approach | Diversification | Risk |
| Focused Fund | Up to 30 stocks | Lower | Very High |
| Flexi Cap | Large, mid, and Small caps | Higher | High to Very High |
| Large cap | Predominantly large companies | Higher | High |
| Mid Cap | Mid-sized companies | Moderate | Very High |
| Small cap | Smaller companies | Moderate | Very High |
| Index fund | Tracks an index | Depends on index | Market-Linked |
Benefits and Risks of focused mutual funds
Focused mutual funds can offer higher growth potential through concentrated stock selection, but they also carry higher risks due to limited diversification
Benefits
- Possibility for greater influence by high-conviction stocks: A good stock is able to have a significant impact on returns in the portfolio since the fund holds less number of stocks.
- Selection of stocks made by professionals: It is not necessary for investors to select and trade their own stocks since the decision regarding selection, holding and selling of stocks is made by the fund manager.
- Diversification between companies and sectors: Despite being highly concentrated relative to other mutual funds, focused funds usually hold several stocks rather than one stock.
- Potential for Long-term wealth generation through investments: Focused portfolios have the ability to generate long-term gains from investments in equities, although returns are never guaranteed.
Risks
- Higher Concentration risk: Poor performance of one or several important stocks will impact the overall portfolio more.
- Market Risk: This is an equity fund, so it is possible that during market correction, the NAV could decrease drastically.
- Fund Manager risk: Performance will also depend on the stock selection by the fund manager.
- Benchmark risk: A fund may outperform its benchmark during long periods of time.
- Short-term Volatility: A focused fund is not an appropriate choice for short-term investments.
Who should consider and avoid focused mutual funds?
Focused equity mutual funds might be considered by individuals with a high risk appetite and a minimum five-year investment horizon. Such investors should have patience to face underperformance of the fund against the broader market.
They might be helpful to be included in the equity investment portfolio of those individuals who are aware of the risks involved and wish to invest actively.
However, investors with a shorter time horizon, lower risk appetite, or desire for stable returns should not consider investing their money in focused mutual funds. They should not invest in such funds just because of their high performance in the past.
How to choose a focused mutual fund
Choosing a focused mutual fund requires looking beyond past returns. Investors should compare risk, performance, and portfolio before investing.
1. Consider Long-term Performance
Do not limit yourself to annual returns. Three-year, five-year and since-inception returns can give a better picture of the past performance of the scheme through different market cycles.
2. Analyse the Risk
All the selected schemes have been rated as Very High risk schemes. So, the investor must consider if he/she can stay invested through any significant falls in the market.
3. Look into the Expense Ratio
The lower expense ratio can help you keep your costs low over a longer period. But cost is only one factor in relation to other aspects like performance, portfolio, etc.
4. Analyse the Portfolio
See what the top holdings of the schemes. If there is too much allocation to a particular sector or stocks in the portfolio, then it may mean higher risks.
5. Analyse the Benchmark
It is important to compare the returns of the scheme against its benchmark. Here, the selected schemes have a benchmark of either BSE 500 TRI or NIFTY 500 TRI.
6. Consider the Fund Manager
Experience of the fund manager and his/her style of management is important as the scheme follows a focused approach.
SIP vs Lump sum focused mutual funds
A SIP allows investors to invest a fixed amount at regular intervals, whereas a lump-sum investment puts the entire amount into the fund at once. Let us discuss it more in detail.
| Factor | SIP | Lump Sum |
| Investment method | Fixed amount invested regularly, usually monthly | Entire amount invested at one time |
| Market timing | Reduces dependence on timing | More dependent on the market level when invested |
| Suitable for | Investors with regular income | Investors with a large amount available for investment |
| Risk management | Spreads purchases across different market levels | Entire investment is exposed to the market from the investment side |
| Market volatility | Can benefit from buying more units when prices fall | Short-term volatility can have a larger immediate impact |
| Cash flow | Suitable for monthly or regular income | Suitable when surplus funds are already available |
For focused funds, SIP can be a practical choice for investors who invest from regular income, while lump sum may suit those investors who already have surplus and can tolerate market volatility.
Direct vs regular focused mutual funds
Direct and Regular plans invest in the same mutual funds, but they differ mainly in how they are purchased and in the costs involved. This difference can affect the expense ratio and long-term returns.
| Factor | Direct Focused mutual fund | Regular Focused mutual fund |
| Purchase method | Invested directly wth the mutual fund company | Invested through a distributor or intermediary |
| Expense ratio | Generally lower | Generally higher |
| Distributor commission | No distributor commission | Distributor commission is included in expenses |
| NAV | Usually higher over the long-term because of lower expenses | Comparatively lower because of higher expenses |
| Best for | Cost-conscious, self-directed investors | Investors who value distribution and guidance services. |
Direct and regular plans do not represent any investment strategies; the main difference is cost and distribution. Investors should compare the expense ratio and services provided before choosing between them.
Taxation of focused mutual funds
The following table shows the taxation applicable to focused mutual funds as of 18 August, 2026.
| Holding Period | Tax Treatment |
| Up to 12 months | Short-term capital gains taxed at 20% |
| More than 12 months | Long-term capital gains exceeding ₹1.25 lakh in a financial year are taxed at 12.5% |
| LTCG up to ₹1.25 lakh | Exempt, subject to applicable conditions |
Other best mutual fund categories
Apart from Focused funds, there are various other segments in the Indian mutual fund sector. Based on the personal investment goals and risk-taking ability of a person, the below-mentioned mutual fund types can be considered:
FAQs
The five best-performing focused mutual funds as of August 17, 2026, in terms of three-year annualised return are Invesco India Focused Fund, ICICI Prudential Focused Equity Fund, HDFC Focused Fund, SBI Focused Fund and Mahindra Manulife Focused Fund. But the Past performance of these mutual funds is no indicator of future performance.
A focused mutual fund is an appropriate option for investors who can take high risks and have a long-term investment approach. Because focused mutual funds invest in a smaller number of stocks, they may have higher returns.
Invesco India Focused Fund generated the highest three-year annualised return as of August 17, 2026. It is important for investors to focus on risk, expense ratio, portfolio quality, and consistency of returns rather than select a fund based on its return alone.
SEBI recommended that investors look at the long-term return potential, expense ratio, portfolio diversification, benchmark, fund manager, AUM, and risk level of the fund.
Focused funds can be ideal for those investors who have a high risk appetite and a time horizon of at least five years. Focused funds can be unsuitable for those investors who require funds in the near future or who cannot bear any risk.
One-year returns keep changing with changes in the market and hence should not be considered as the sole criterion for picking out the best fund. The latest data available should be taken into account by investors while making the selection.
No, Focused mutual funds are equity investments, and therefore they are vulnerable to market risks. Their high concentration can make them even more risky due to their dependency on the performance of particular shares. They neither give any guarantees of return nor of capital protection.
There is no “right” or “best” time to invest in an equity fund. Consider SIP to diversify your investments over time rather than through market timing. First, determine your level of risk, investment horizon, and financial objectives before making an investment decision.
