4 best focused mutual funds which beat the benchmark index in the past 10 years

Prior to investing in a mutual fund scheme, retail investors are expected to weigh a number of pros and cons relating to the scheme and its returns, and rightly so!

These considerations include the sector the scheme belongs to, macro-economic scenario, reputation of asset management company (AMC), and importantly — the past performance of the fund vis-à-vis other schemes in the category, among others.

It is advisable to evaluate a mutual fund’s performance based on its ability to beat the benchmark index on a regular basis year after year.

Here we zero in a few schemes that belong to the category of focused mutual funds and which beat their benchmark index — a yardstick against which the scheme wants to measure its performance.

What are focused mutual funds?

Focused mutual funds refer to the schemes which invest in a select number of securities related in some way to each other. These schemes usually hold fewer number of stocks unlike other funds which have exposure across numerous sectors and companies.

(Source: AMFI, 10-year-returns as on Oct 12, 2023)

As we can see in the table above, the highest 10-year performance was delivered by Quant Focused Fund (19.03%) and Nippon India Focused Equity Fund whose performance was far ahead of the benchmark index fund.

Other top-performing focused mutual funds delivered annualised returns in the range of 17-20 percent.

Let us give a snapshot of these top-performing scheme:

Quant Focused Fund: It was launched on July 3, 2008 and has given an annualised return of 13.33 percent since its inception. It is a small fund with total AUM of ₹367 crore.

The key constituent stocks include Jio Financial Services, Treps, RIL, DLF and Bikaji Foods International.

Nippon India Focused Equity Fund: It was launched on Dec 26, 2006 and has delivered an annualised return of 14.21 percent since its inception. It is a large fund with total AUM of ₹6,976 crore and key constituent stocks include HDFC Bank, Axis Bank, Infosys, ICICI Bank and ITC.

SBI Focused Equity Fund: It was launched on October 11, 2004 and has delivered an annualised return of 18.64 percent since inception.

It is a large fund with an AUM of ₹29,473 crore and key constituent stocks include HDFC Bank, Alphabet Inc, ICICI Bank, Muthoot Finance and Treps.

Franklin India Focused Equity Fund: It was launched on July 26, 2007 and has delivered an annualised return of 13.70 percent. It has an AUM of ₹9,359 crore and has key constituent stocks of ICICI Bank, HDFC Bank, L&T, Axis Bank and Infosys.