Invest in HDFC Focused Fund

Today’s standout option is the HDFC Focused Fund Direct – Growth, thanks to its strong 5-year track record of ~28.4% annualized returns and consistent performance across 1- and 3-year horizons.

HDFC Focused Fund Direct – Growth

• 5-year return: 28.43%
• 3-year return: 22.58%
• 1-year return: 9.83%

Why it’s strong:

Focused funds invest in 20–30 high-potential companies, allowing managers to closely monitor performance. This concentrated strategy has delivered superior long-term returns compared to broader funds.
• Best for: Investors with moderate-to-high risk appetite who want growth through quality stock selection.

HDFC Focused Fund Direct–Growth is best suited for aggressive investors because it invests in a concentrated portfolio of up to 30 high-conviction stocks across large, mid, and small caps, aiming for superior long-term growth. Its current expense ratio is 0.61% (as of Oct 31, 2025).

🔎 Why It Appeals to Aggressive Investors

• Focused Strategy: Unlike diversified equity funds that hold 50–100 stocks, this fund limits itself to ~30 companies. This concentration magnifies both upside potential and downside risk, making it ideal for investors comfortable with volatility.
• Multi-Cap Flexibility: The fund can invest across large, mid, and small-cap segments, giving it the freedom to chase growth opportunities wherever they arise.
• High Risk–High Reward: The fund is rated “Very High” on the Riskometer, meaning it suits investors who can withstand short-term fluctuations for the chance of higher long-term returns.
• Track Record: Since inception (2013), it has delivered ~16% annualized returns, consistently outperforming many peers.
• Alpha Generation: By betting on fewer but stronger ideas, the fund manager can generate alpha compared to passive index investing, which appeals to aggressive investors seeking market-beating returns.

📊 Expense Ratio & Costs

Expense Ratio (Direct Plan): 0.61%
Expense Ratio (Regular Plan): Higher, due to distributor commissions
Exit Load: 1% if redeemed within 1 year
Minimum Investment: SIP ₹500, Lumpsum ₹1,000

HDFC Focused Fund has established itself as a top-tier performer in the focused category. As of early 2026, the fund’s ability to maintain high returns while managing risk makes it a compelling choice for long-term investors.

Here are five key reasons why HDFC Focused Fund is a strong investment choice based on its track record:

1. Superior Alpha Generation

The fund has consistently delivered positive Alpha (currently around 7.80), which means it significantly outperforms its benchmark for the level of risk taken. While a 5-year annualized return of ~23% to 25% is impressive, the real value lies in the fund’s ability to beat the category average by a wide margin (often over 8-10%).

2. High-Conviction Portfolio Strategy

Unlike diversified funds that hold 50–100 stocks, this fund follows a concentrated approach, holding a maximum of 30 high-conviction stocks. This allows the fund manager to:

Focus on “best ideas” rather than diluting returns with mediocre performers.
Allocate heavily to top-tier names like HDFC Bank, ICICI Bank, and Axis Bank, which form the core of the portfolio (over 50% in the top 10 holdings).

3. Exceptional Risk-Adjusted Returns

Despite the inherent risks of a concentrated portfolio, the fund’s risk metrics are excellent:

Sharpe Ratio: At approximately 1.56, it indicates a high reward-to-risk ratio.
Beta: At 0.71, the fund is technically less volatile than the broader market, which is rare for a focused fund. This suggests the fund manager, Roshi Jain, has been highly effective at selecting stable growth stocks that don’t swing as wildly as the index.

4. Resilient “Bottom-Up” Stock Selection

The fund employs a flexi-cap, bottom-up approach. While it leans toward Large-cap stability (approx. 74%), it maintains strategic exposure to Mid-cap and Small-cap opportunities. This blend has helped it remain resilient during various market cycles, including a strong recovery capability after major drawdowns (like the 2020 crash).

5. Sector-Specific Expertise

The fund is currently overweight in the Financial Services and Automobile sectors. By taking tactical bets on sectors poised for recovery or growth, the fund has managed to capture cyclical upswings effectively. The low portfolio turnover (around 32%) also suggests a “buy-and-hold” conviction, which reduces transaction costs and benefits from long-term compounding.

Horizon	Fund Return (Direct)	Category Average	Outperformance
1-Year	~13.0%	~5.0%	+8.0%
3-Year (CAGR)	~22.3%	~16.2%	+6.1%
5-Year (CAGR)	~25.4%	~15.6%	+9.8%

1. HDFC Focused Fund: The “Aggressive Domestic” Choice

Strategy: Concentrated portfolio (max 30 stocks) with a heavy bias toward Indian Financial Services and Automobiles.
Best for: Investors those who have high conviction in the Indian domestic story and want to maximize returns. It has shown the strongest 5-year performance, but its concentrated nature makes it vulnerable if the banking sector underperforms.
Risk Profile: High. While its Beta is low, the concentration in a few stocks means individual company news can cause sharp movements.

2. Parag Parikh Flexi Cap: The “Steady Global” Choice

Strategy: A value-oriented approach that invests in Indian stocks plus international tech giants like Alphabet (Google). It often maintains a cash cushion (up to 20%) when markets are overvalued.

Best for: Conservative equity investors. It offers the best downside protection and global diversification. Its Beta of 0.57 is significantly lower than its peers, meaning it falls much less than the market during crashes.

Risk Profile: Moderate-High. The most “stable” of the three.

3. SBI Focused Fund: The “Conservative High-Conviction” Choice

Strategy: Managed by veteran R. Srinivasan, this fund follows a very strict “Bottom-Up” selection. It has historically been more conservative than HDFC, leading to slightly lower returns in bull markets but better resilience in sideways markets.
Best for: Investors who want a focused approach but trust a more cautious, long-tenured management style over aggressive growth-chasing.
Risk Profile: High (Category-wise) but relatively stable compared to more aggressive focused funds.

HDFC Focused Fund 2025 – Returns, Expense Ratio, Risk Analysis