Focused Funds Compare

Additional Useful Information

• An investor can buy “Units” of these mutual funds. These units can be purchased at a price which is called the “Net Asset Value or NAV”. The NAV of these funds keeps changing daily depending upon the changes in the stock prices of the companies that are held by them.

• The investor can sell these units anytime at the NAV price prevailing on the day of the sale.

• Total Purchase Amount	=	Number of Units X NAV as on the day of purchase
  Total Sale Amount	=	Number of Units X NAV as on the day of sale
  Total Gain	=	Total Sale Amount – Total Purchase Amount

• The fund house which issues a Focused Mutual Fund may offer two options to select from –
• IDCW Option – In this option, growth in the mutual fund value is distributed back to the investor’s bank account in the form of periodic payouts called “Dividends”. This payout could be monthly or quarterly.
• Growth Option – In this option, growth in the mutual fund value is invested back in the fund for further growth. The investor’s gains are in the form of higher NAV price of the units of the fund.

• If an investor buys units in a Focused Mutual Fund and sells them within a certain short period of time, then the fund house may charge the investor, certain nominal fees, at the time of the sale. These charges are the “Exit Load”. This period of time is typically less than 1 year but varies from fund to fund. Typical exit loads can vary from 0 to 1% of the sale amount.

• Focused Mutual Funds are considered a good investment option over the long term (more than 5 years).

Returns *

• Focused Mutual Funds do not guarantee any returns. They are subject to market risks.

• If Focused Mutual Funds are held over a 7-year period, they could generate returns ranging from 14% to 23.5% per year.

Risk Level

• Focused Mutual Funds are categorized as high-risk investments since they invest in the equity stock market.

Liquidity

• When an investor sells (or redeems) units of these funds, the fund house will pay the sale amount to the investor in 2 working days (T+2).

Interesting Facts

• Since the stocks in Focused Mutual Funds are highly correlated, diversification benefits may reduce since typically, stocks that have high correlation tend to move with each other.

Tax Implications

• Earnings received from Focused Mutual Funds are taxable.

• When investors sell their Focused Mutual Fund units, the difference between the Sale Amount and Purchase Amount is typically called “Capital Gain” or “Capital Loss” (if sale amount is lesser than the purchase amount).

• The tax that the investor must pay on Capital Gain is –
• Situation 1 – If the Focused Mutual Funds are sold within a period of 2 years from investment, the Capital Gains earned (called Short Term Capital Gains) are taxed at 20% of the gain.
• Situation 2 - If the Focused Mutual Funds are sold after a period of 2 years from investment, the Capital Gains earned (called Long Term Capital Gains) are taxed at 12.5% of the gain. There is no tax in case of “Capital Loss”.

• For any dividends/payouts received by investors from Focused Mutual Funds, these amounts are added to their total taxable income and tax is required to be paid as per the tax slab.

Where To Invest

• https://groww.in/p/equity-funds/focused-funds

• https://www.etmoney.com/mutual-funds/equity/focused/77