> ## Content Index
> Fetch the complete content index at: https://www.clinkwealth.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# What are focused mutual funds, why should you add them to portfolio?
- URL: https://www.clinkwealth.com/what-are-focused-mutual-funds-why-should-you-add-them-to-portfolio/
- Published: 2026-11-03T09:55:26.000Z
- Updated: 2026-11-03T09:55:26.000Z
- Description: Focused funds are mutual funds that hold a small number of stocks, at most 30, with at least 65% of the money in equity and equity-related instruments.
- Author: Vimal Chander Joshi
- Tags: mutual funds, portfolio, equity, investing

If you want equity exposure through mutual funds and can take a bit more risk, focused funds are worth a look. Most investors stick to the usual large-cap, mid-cap and small-cap funds, but some prefer to go beyond the obvious.

**What are focused funds?**

These funds invest in a limited number of stocks, no more than 30, with at least 65% of the money going into equity and equity-related instruments. It's not a popular category. As of 30 November 2025, there were 28 schemes with total assets under management (AUM) of ₹1.74 lakh crore.

Because the money sits in just a few stocks, these funds are riskier than other equity funds. Large-cap funds can spread across many stocks, and flexi-cap funds can move across market caps, but focused funds have far less room to do that.

**Why invest in them?**

There are a few reasons. Some investors have strong conviction in a handful of stocks. Others simply don't want their money spread across too many companies. And some add a focused fund after they've already built a base with large-cap and flexi-cap funds.

That said, you don't have to put any part of your portfolio into them.

Alekh Yadav, Head of Investment Products at Sanctum Wealth, said you should judge a focused fund the way you'd judge any other fund. "Look at the fund manager's track record, the strategy, how steady the performance is, and how the fund behaves across market cycles. What sets focused funds apart is that they're concentrated, so they can be more volatile and carry more stock-specific risk. If a fund passes the usual checks and suits your risk profile, a small allocation can make sense. But there's no real need to hold one," he said.

Some of these funds have done very well. About half a dozen schemes have returned more than 19% a year over the past three years.