What Are Focused Funds?

As per SEBI’s mandate, focused funds are equity funds that can hold a maximum of 30 stocks. So, in focused funds, fund managers are highly selective with their investment choices. By focusing on just a few stocks, focused funds seek to generate better returns, though concentrating on a few bets also increases the risk. A focused fund can be of any type: large, mid, small, flexi or multi.

SBI Focused Equity Fund is a flexi type of focused funds, so it can invest across the market cap spectrum in any proportion. It’s managed by R Srinivasan, who has been at the helm since 2009, when the fund was called SBI Emerging Businesses Fund.

What is The Rate of Return of SBI Focused Equity Fund?

To understand the fund’s performance, we compared its historical rolling returns after April 2018 (as the category came into being only after that) with the category average rolling returns of focused funds and the more diversified flexi-cap funds.

Is It Good To Invest in a Focused Equity Fund?

SBI Focused Equity is a middle-of-the-road performer that has become popular if one goes by the growth in AUM. What could have led to its success? The fund is managed by R Srinivasan, who also manages the superhit SBI Small Cap Fund, which has made many investors wealthy. It’s likely that investors have betted on the fund manager by investing in this fund. However, it appears that Srinivasan’s magic is yet to work with this fund.

If we go just by the performance since reclassification,, there is a limited investment case for this fund. Moreover, focused funds can also be riskier than their diversified peers and hence have a greater responsibility to compensate their investors with superior performance, something which hasn’t happened yet with SBI Focused Equity.

So, if you are invested in this fund because it’s managed by Srinivasan, you can wait for the fund to do well. Those who haven’t invested in the fund or those who invested without the Srinivasan factor in mind can look at the many other options available in the flexi-cap and focused spaces.