New Delhi, Nov. 12 -- Focused funds are a category of equity mutual funds that do not follow any market-cap-based allocation rule. Instead, they are required to invest in up to 30 stocks, with at least 65% of their assets allocated to equity and equity-related instruments.

Other active equity fund categories, such as large-cap, mid-cap and small-cap funds, have specific market-cap allocation requirements, but there is no restriction on the number of stocks they can hold.

These funds generally invest in a larger number of stocks, often exceeding 100 or 200, to diversify their portfolios and spread risk across companies. However, some active equity funds choose to keep their portfolios concentrated despite not being classified as focused ...