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Stock Analysis, IPO, Mutual Funds, Bonds & More

What is a concentrated mutual fund portfolio?

The more concentrated a portfolio is, the higher the chance for its returns to deviate significantly from the benchmark, either positively or negatively.

ET CONTRIBUTORS|
Nov 11, 2019, 06.30 AM IST
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Even concentrated funds cannot invest more than 10% of their portfolio in a single stock.
1. A concentrated fund holds a smaller number of stocks with a higher exposure to each of these stocks.

2. The impact each stock has on a fund’s overall performance increases as the number of holdings decrease.

3. The more concentrated a portfolio is, the higher the chance for its returns to deviate significantly from the benchmark, either positively or negatively.

4. Even concentrated funds cannot invest more than 10% of their portfolio in a single stock.

5. These funds are high on risk and returns and suitable for investors with a moderate to aggressive risk profile.

(The content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)

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