A Focused Fund holds a concentrated portfolio of maximum 30 stocks across any market cap — the fund manager bets on high-conviction picks rather than broad diversification.
SEBI defines a Focused Fund as an equity scheme holding a maximum of 30 stocks, with no restriction on which market cap segment these come from. The fund manager has high conviction in each position — meaning the portfolio reflects their best ideas rather than a diversified safety net. Focused funds can deliver superior returns if the manager's picks are right, but they can also underperform badly if even a few key holdings go wrong.
Most equity funds hold 50–100 stocks so that if a few fail, the portfolio is insulated. A Focused Fund is the opposite — the manager says 'I have 30 stocks I truly believe in and I'm going all-in on those.' It's a concentrated bet on skill. If the manager is right, focused funds can significantly outperform. If wrong, the lack of diversification magnifies losses.
Maximum 30 stocks in the portfolio at any time.
Can invest across large, mid, and small-cap — no category restriction.
Higher stock-specific risk than diversified equity funds.
Performance is more sensitive to individual company events — one large holding going wrong hits the NAV hard.