Focused Fund


DEFINITION of 'Focused Fund'

A mutual fund which rather than holding a diversified mix of equity positions focuses on a limited number stocks in a limited number of sectors; unlike many funds which hold positions in excess of 100 companies, focused funds generally will hold less than 20-30 types of stocks.

BREAKING DOWN 'Focused Fund'

Focused funds allocate their holdings between a limited number of carefully researched securities. Although they do not experience the benefits of diversification because of the "search for quality" strategy, focused funds rely on research expertise for above average stock picking. As a result, returns tend to be more volatile. This fund is also known as an "under-diversified fund" or "concentrated fund."

  1. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments ...
  3. Style Drift

    The divergence of a mutual fund from its stated investment style ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. Asset Allocation

    An investment strategy that aims to balance risk and reward by ...
  6. Style

    The investment approach or objective that a fund manager uses ...
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