Focused Mutual Funds

A focused fund is an equity fund that may own shares in no more than 30 companies. A mutual fund pools money from many people, and a professional manager invests it under rules set by SEBI, the market regulator. Equity means shares of companies.

SEBI sorts funds into categories, labels that fix what a fund may hold. SEBI's name for this one is Focused Fund. A scheme's name must be the same as its category, and scheme is simply another word for fund. Two limits define the category:

• At most 30 stocks. The cap applies to the whole scheme.
• At least 80% in equity. This floor has applied since 26 February 2026.

You may still see 65% quoted for focused funds. The floor in force is 80%.

There is one more rule. Each scheme must state where it intends to focus: multi cap, large cap, mid cap or small cap.

Those bands come from market capitalisation, or market cap: a company's size, its share price times its number of shares. AMFI, the fund industry's association, ranks every listed company this way. Ranks 1 to 100 are large cap, 101 to 250 mid cap, and 251 onwards small cap. On the list for the six months ended 30 June 2026, Godrej Industries sat at rank 250, a mid cap. Its average market cap was ₹33,664 crore. Navin Fluorine International, at 251, was a small cap, with an average market cap of ₹33,442 crore.

The stated focus tells you where the manager intends to invest. SEBI sets no minimum for it. So check which focus a fund declares.

You will find it in the scheme's type line, printed below its name. It reads 'An open ended equity scheme investing in maximum 30 stocks', followed by the focus.

The money outside equity, up to 20%, may go into money market and other liquid instruments (short-term, cash-like holdings). It may also go into gold and silver instruments, or InvITs (funds that invest in infrastructure projects), each within SEBI's limits.

Each stock carries more weight in the fund's value. A simple assumption shows the size of it.

Suppose a fully invested fund held 30 stocks in equal amounts. Each would be about 3.3% of the fund (100 ÷ 30). If one of them halved in price, the fund would lose about 1.7% from that stock alone. Real funds do not hold equal amounts, so treat this only as an illustration.

In rupees: put ₹10,000 into that imaginary fund and each stock holds about ₹333. One stock halving costs you about ₹167.

The riskometer is the risk label SEBI makes every fund show, on six levels from Low to Very High, checked every month. Every listed focused fund read Very High on 29 September 2026.

SEBI's formula scores each share a fund holds. Two of the measures are company size and daily volatility, which is how much a price moves from day to day. Whatever focus a fund declares, its equity scores at least 5, which is High. Any mid or small cap holding lifts the score above 5. So does a stock with daily volatility above 1%. Above 5 is Very High.

Each fund works out its level every month and must publish it within 10 calendar days of month-end. The level can change, so read it on the fund's own page.

Falls across the whole market can be deep. The NIFTY 50 is an index, a list of companies picked by fixed rules, here 50 of them, whose combined value is tracked every day. It fell 59.9% between 8 January and 27 October 2008. It fell 38.4% between 14 January and 23 March 2020. On the 2008 figure, ₹10,000 moving with the index would have been worth about ₹4,000 at the low.

Whether a focused fund should be your only equity fund depends on your timeline, your other holdings and the falls you can sit through. A focused fund puts its equity money into 30 companies or fewer. That is a concentrated holding.

Here is what each of those means:

• When you need the money. Koshex suggests 5 years or more for this category. That is our suggestion, not a SEBI rule.
• What else you hold. Look at how much of your equity money already sits in other funds.
• How large a fall you can sit through. On the NIFTY 50's 2008 fall of 59.9%, ₹50,000 would have dropped to about ₹20,000.

There is no lock-in, a period during which you cannot sell at all. Focused funds are open ended, so you can sell your units (your share of the fund) whenever you choose. When you redeem, meaning sell units back to the fund, the money must reach you within 3 working days.

An exit load is a fee some funds charge if you sell within a set time after buying. Each focused fund sets its own. Check it on the scheme's page before you invest.

A distributor is a registered firm that helps you buy and manage funds. Koshex is one, with AMFI registration ARN-154632. We can help you choose a fund that suits your goal and your timeline.

The tax on a focused fund depends on how long you held the units and how large the gain is. First, the fund must count as equity-oriented for tax.

It counts if at least 65% of its money sits in shares of Indian companies listed on a stock exchange, averaged over the year. This is a tax test, separate from SEBI's 80% floor. The rates below come from the Income-tax Act, 2025, in force from 1 April 2026.

Your holding period is how long you owned a unit, from the day you bought it to the day you sell it. It decides the rate.

• Short-term capital gain: profit on units held 12 months or less. It is taxed at 20% (section 196).
• Long-term capital gain: profit on units held more than 12 months. It is taxed at 12.5% (section 198), only on the part above ₹1,25,000 in a tax year.

Here are three assumed gains, not return forecasts. Each adds 4% cess, an extra charge on the tax, and assumes no surcharge (an extra charge on the tax once total income passes ₹50 lakh).

• Your only equity long-term gain this tax year is ₹1,10,000. It is below ₹1,25,000, so no tax is due on it.
• Your long-term gain is ₹2,70,000 instead. Only the part above ₹1,25,000 is taxed, which is ₹1,45,000. At 12.5% that is ₹18,125. Cess adds ₹725, so you pay ₹18,850.
• You sell units held 12 months or less for a ₹38,000 gain. At 20% that is ₹7,600. Cess adds ₹304, for ₹7,904.

No TDS, tax deducted at source, applies when a resident sells units for a gain. The gain is still taxable at the rates above.

IDCW is a payout a fund makes from its income or gains. It reduces the NAV, the price of one unit, by the amount paid. The growth option pays nothing out and keeps the money invested. IDCW is added to your income and taxed at your slab rate, the rate on your normal income. If it is more than ₹10,000, the fund deducts 10% TDS first. That TDS is credited against your tax for the year.

The three differ in how many stocks they may hold and where the money must go.

• Focused: at most 30 stocks and at least 80% in equity, with a stated focus on multi, large, mid or small cap.
• Flexi cap: at least 65% in equity, invested across large, mid and small cap companies. Its rule carries no stock cap.
• Large cap: at least 80% in large cap companies, ranks 1 to 100 on AMFI's list.

A large cap fund's 80% floor is tied to company size. A focused fund's 80% floor covers equity in general. Its focus is stated, with no minimum set for it.

On risk, the three look alike today. Every listed fund in all three categories read Very High on 29 September 2026. Koshex suggests 5 years or more for each of them.

The riskometer label does not tell them apart, but their rules do. Read the type line of any focused fund you are weighing: it shows the 30-stock limit and the focus the fund has declared.

Start with the fund's declared focus, then compare its numbers with the category's.

• Focus. Check the scheme's type line for multi, large, mid or small cap. Two focused funds can declare different focuses, so check this before you compare their numbers.
• CAGR. This is the average yearly growth rate over a period, as if the fund had grown at the same pace every year. Of the 28 focused funds listed, 27 have a 3-year record, so they are ranked on 3-year return and counted in the averages. Set a fund's 3-year and 5-year CAGR against the category averages of 4.3% and 9.3%. The 1-year average, 0.7%, covers a single year. Results differ widely from fund to fund, and the table shows each one.
• Expense ratio. This is the fund's yearly fee, shown as a percentage of your money and taken out of the fund's value. SEBI caps the main part, the base expense ratio, at 2.10% a year on a fund's first ₹500 crore. The cap steps down as the fund grows. The table shows what each fund actually charges.
• AUM. Assets under management is the current total value of the money a fund manages, not the amount people paid in. The 28 listed focused funds hold ₹1,88,781 Cr between them.
• Riskometer. Read it on the fund's own page, since each fund checks its level every month.

Through Koshex you invest in the regular plan, the version of a fund bought through a distributor. We help you match a fund from this list to your goal. After you invest, we review your holdings. If a fund's category, risk or ranking shifts, we flag it.

Neither wins every time. They differ in how many prices you buy at.

A SIP invests a fixed amount at regular intervals, usually monthly. Each instalment buys units at that day's NAV. Your money goes in across many prices. A lumpsum is a larger amount invested at one time. It rests on a single entry date.

Each SIP instalment has its own holding period. Say you start a monthly SIP in October 2026 and sell everything in March 2028. The October 2026 units were held more than 12 months, so their gain is long-term. Units bought from April 2027 onwards were held 12 months or less. Their gain is short-term, taxed at 20%.

Whichever route you take, Koshex talks you through sharp market falls before you redeem.