Focused fund,

Definition of Focused fund:

1. Mutual funds are often marketed as a good way to diversify a portfolio of investments. Indeed, most mutual funds are designed to hold a position in a large number of companies, with various pre-defined weights, saving the investor the trouble of selecting each security individually. This diversification allows an investor to gain access to the equity risk premium while minimizing risk and volatility.

2. A focused fund is a mutual fund that holds a only relatively small variety of stocks or bonds that are similar along some dimension. By definition, a focused mutual fund focuses on a limited number stocks in a limited number of sectors, rather than holding a broad or diversified mix of positions. Focused funds tend to hold positions in roughly 20-30 companies or less, unlike many funds which hold positions in well more than 100 companies.

3. A mutual fund that holds large positions in fewer than 30 stocks or in fewer than three sectors. Compare to a Diversified Fund.

How to use Focused fund in a sentence?

1. A sector fund, for instance, will hold only stocks that are in a particular industry segment and have been carefully researched for inclusion.
2. A focused fund is a category of mutual fund that invests in a small number of securities that are each related in some way.
3. Focused funds give pinpointed market exposure, rather than a broad diversified portfolio.