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Focused MFs manage Rs 1.72 lakh crore as of January 2026; These funds can hold a maximum of 30 stocks in their portfolio under Sebi regulations.
Under Sebi regulations, focused funds can hold a maximum of 30 stocks in their portfolio.
Focused mutual funds are emerging as a preferred choice for investors seeking high-conviction portfolios. As of January 2026, the category manages assets of Rs 1.72 lakh crore, reflecting steady investor traction.
Under Sebi regulations, focused funds can hold a maximum of 30 stocks in their portfolio. Unlike large-cap or mid-cap funds, they have the flexibility to invest across market capitalisations. This concentrated structure allows fund managers to take meaningful positions in selected stocks, potentially generating higher alpha through stock selection.
However, concentration also increases stock-specific risk. Performance can be significantly influenced by a few large holdings. As a result, fund manager strategy and allocation discipline play a crucial role in returns.
How Focused Funds Are Positioned In The Current Market
India’s macroeconomic fundamental remains relatively supportive. The country continues to be among the fastest-growing large economies, with manageable inflation and stable interest rates. While global uncertainties persist, including recent tariff-related developments in the US and Middle East conflicts, India’s direct exposure appears limited in the near term.
With corporate earnings showing signs of recovery, focused funds may benefit from their ability to take concentrated bets on sectors and companies expected to outperform in an improving earnings cycle.
Which Schemes Are Outperforming?
Performance within the category has been differentiated. One of the consistent outperformers has been the Mahindra Manulife Focused Fund.
On a point-to-point basis across one-, three- and five-year periods, the scheme has outperformed its benchmark, the Nifty 500 TRI, by roughly 1-6 percentage points.
As of February 20, 2026, the fund has delivered a five-year compounded annual return (CAGR) of 20.3%, placing it among the stronger performers in the focused fund category. Over the same period, it has outpaced peers such as SBI Focused Fund, Invesco Focused Fund, Kotak Focused Fund and Franklin India Focused Equity Fund.
Rolling return data also indicates consistency. Between November 2020 and February 2026, the fund’s three-year rolling returns exceeded those of the Nifty 500 TRI in 100% of the observations. During this period, three-year returns remained above 15% across all rolling windows. The average three-year rolling return stood at 26.5%, compared with 17.5% for the benchmark.
For SIP investors, the scheme generated a five-year XIRR of 18.4%, compared with 13.4% for an SIP in the Nifty 500 TRI over the same period.
The Mahindra Manulife fund maintains a predominantly large-cap orientation. As of January 2026, more than 92% of the portfolio was invested in large-cap stocks, though historically the allocation has moved below 80% when broader market momentum favoured mid- and small-cap opportunities.
The large-cap bias provides stability, while tactical allocation across market caps allows flexibility during favourable cycles.
Sector-wise, financial services have been the largest allocation, typically accounting for over one-third of the portfolio. This exposure has supported performance over the past 16-18 months, as the sector outperformed. Oil & gas and consumable fuels have also been meaningful allocations. The fund has maintained overweight positions in select old-economy segments such as commodities, power and PSU banks.
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March 02, 2026, 16:53 IST
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