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Best focused mutual funds for 2022

Focused Equity Mutual Funds

Diversification is a good strategy to limit your risks, but some investors believe that diversifying too much limits the returns from the stock markets. The returns in 2022 so far have not been great because of various factors like the war in Europe, high inflation, etc. The low returns have made the investors try new strategies to get market-beating returns. 

For this class of investors, focused mutual funds are a good strategy to get high returns from the stock markets. Focused mutual funds limit the number of stocks to 30 in a mutual fund scheme. This means that the fund manager can choose his/her favourite stocks to generate higher returns for the investors. This strategy can work very well if the fund manager can identify the marker outperformers. But if the fund manager cannot beat the markets, this strategy can backfire. 

The focused mutual funds invest in Flexi cap stocks, i.e., the fund manager can choose the stocks irrespective of the market capitalization of the stocks. This strategy can work well if the fund manager has 20-30 favourite stocks, and he/she expects those stocks to beat the market. Over diversification will limit the returns, as the fund manager will find it extremely hard to track all the stocks, and even if he/she can track the stocks, he/she might not like them. In this case, a concentrated portfolio or a focused mutual fund can help the investor to generate market-beating returns. 

Related: Focused fund vs Diversified mutual funds: Which one to choose?

Top performing focused funds in India to invest in 2022

The best mutual funds are usually the funds that have given consistent returns. Although the past returns are no guarantee of future returns, if the returns are good in the past, there is a high chance of good returns in the future.

The top funds 2022 for focused mutual funds are:-

focused mutual funds

The above list of focused equity mutual funds is outperforming the markets on a consistent basis. This does not mean that in all the timeframes, the returns have been more than the market returns. It simply means that in the long-term, these focused funds have performed well in the markets.

Related: How are returns generated from mutual funds taxed in India?

The best-performing mutual funds can help you generate market-beating returns and fulfil your targets faster. We have compiled four best focused mutual funds for you. You should consider your financial advisor as well and understand if focused funds are the right fit for you. You need to understand that focused funds are riskier than diversified funds, and you need to understand all the intricacies before selecting your mutual funds. You can also consult your financial advisor, who is more likely to understand your risk profile and make the correct recommendations.

Read this Premium article to understand How to build a diversified portfolio with Nifty50, Nifty Next 50, Midcap 150 and Smallcap 250 Index funds?