Fund of Fortnight

Every fortnight, we recommend one open-ended equity diversified fund that has the best potential of returns for the next one year considering its constituents remain the same.[EasyDNNnews:PaidContentStart]

Reason for recommendation
ITI Focused Fund is a focused equity Mutual Fund that follows a concentrated investment strategy, investing in a limited number of high-conviction stocks across sectors. Such a strategy can potentially enhance returns when investment calls work in favour of the fund, but it also increases concentration risk. The scheme is therefore more suitable for investors with a long-term investment horizon and the ability to withstand equity market volatility. The fund has delivered strong performance across several investment periods, particularly over the medium to long term. Over three months, it generated a return of 6.92 per cent, broadly in line with the category average of 6.97 per cent. The performance improved over longer periods, with the fund delivering 11.77 per cent over six months against the category average of 8.20 per cent. The one-year return stood at 12.69 per cent, substantially higher than the category average of 2.78 per cent. Over two years, the fund generated 7.57 per cent compared with the category average of 1.24 per cent, while the three-year return of 18.34 per cent also remained ahead of the category average of 11.38 per cent.

On the risk front, the fund has a standard deviation of 16.31 and a beta of 1.03, indicating volatility broadly in line with, but slightly higher than, the market. Its Sharpe ratio of 0.85 and Sortino ratio of 1.03 indicate reasonable risk-adjusted performance. The portfolio has its highest exposure to Financials at 18.90 per cent, followed by Capital Goods at 14.09 per cent, Healthcare at 11.04 per cent, Metals and Mining at 7.91 per cent, and Energy at 7.43 per cent. Among its major holdings are ICICI Bank at 5.18 per cent, Solar Industries India at 4.48 per cent, HDFC Bank at 4.45 per cent, Vedanta Aluminium Metal at 4.42 per cent, and Reliance Industries at 4.36 per cent. Overall, ITI Focused Fund has outperformed its category across several longer investment periods. However, investors should consider the higher concentration risk associated with focused funds and assess whether the scheme fits their risk appetite and investment horizon.

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