As you can see, these plans have a consolidated portfolio. That means the fund manager selects stocks based on his or her beliefs and takes meaningful exposure in the stocks. Such investments can pay off handsomely if the call is made correctly. However, if a few calls go wrong, the plan will suffer a lot. This is a complex betting problem.
Similarly, if the manager succeeds in identifying the sectors and market capitalization ahead of the market, the plan will benefit greatly. If the call is wrong, the plan will suffer a lot. Again, this is a risk of having a concentrated portfolio. You will gain more or lose more – depending on your ability to pick stocks.
If you are ready to take more risk and have an investment horizon of around seven years, you can invest in these schemes. Here are our recommended focus equity mutual fund schemes. Follow monthly updates to track your investments.
Best focused equity mutual funds
ETMutualFunds.com has used the following parameters to list equity mutual fund schemes. 1.
Average returnsHe had rolled every day for the past three years. 2.
Consistency Over the past three years: Hurst Exponent, H is used to calculate the consistency of a fund. The H exponent is a measure of the randomness of the fund’s NAV series. Funds with high H show lower volatility compared to funds. The H exponent is a measure of the randomness of the fund’s NAV series. Funds with high H show lower volatility compared to funds with low H.
i) H = 0.5, the return series is said to be a geometric Brownian time series. This type of time series is difficult to predict.
ii) When H is less than 0.5, the series is called regression.
iii) When H is greater than 0.5, it is called serial persistence. The larger the value of H, the stronger the trend of the series.
Low riskFor this measure, we have considered only negative responses to mutual fund schemes.
X = returns below zero
Y = sum of all squares of X
It is taken to calculate the ratio Z = Y/number of days
Low risk = square root of Z
ExcellenceIt is measured by Jensen’s Alpha for the last three years. Jensen’s alpha represents the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the capital asset pricing model (CAPM). A high alpha indicates that the portfolio’s performance exceeds the market’s expected return.
Average returns in MF scheme =
Asset size: For equity funds, the initial asset size is Rs.50
(Disclaimer: Past performance is no guarantee of future performance.)