Focused Mutual Funds Surge in Popularity Amid High Returns

Focused mutual funds, which invest in a concentrated portfolio of stocks, have seen significant growth. The category's asset base reached Rs 1.43 lakh crore in June 2024, driven by impressive returns of 40-60 per cent from top performing funds. The appeal is further boosted by tax changes making traditional PMS less attractive.

Focused mutual funds, which concentrate on a select group of stocks, are rapidly gaining popularity among investors. The asset base of these funds soared to Rs 1.43 lakh crore in the three months ending June 2024, reflecting a 31 per cent year-on-year growth.

Top-performing focused funds, such as Invesco India Focused Fund and Mahindra Manulife Focused Fund, reported extraordinary returns ranging from 40 to 60 per cent over the past year. This surge in performance is driving the interest of investors seeking high returns.

According to the Association of Mutual Funds in India (Amfi), the strong performance and tax advantages over portfolio management services (PMS) are making focused mutual funds an attractive investment option. Industry experts recommend systematic investment plans (SIPs) to mitigate risks associated with the concentrated nature of these funds.

(With inputs from agencies.)