Comparing HDFC Focused Fund and SBI Focused Fund: An Analysis for Investors' Understanding
In the realm of diversified equity funds, two prominent players stand out – the HDFC Focused Fund and the SBI Focused Fund. Both funds follow a buy-and-hold strategy, as evidenced by their portfolio turnover ratios, which range between 23-38% for the HDFC Focused Fund and 30-50% for the SBI Focused Fund.
Investment Flexibility and Diversification
Both funds have the flexibility to invest in a variety of assets. The SBI Focused Fund can invest up to 35% of its assets in foreign securities and up to 10% in REITs & InvITs. On the other hand, the HDFC Focused Fund primarily targets well-established large-cap stocks for the core portion of its portfolio, but it also invests in midcaps and smallcaps to capitalise on high-growth opportunities. Both funds limit their portfolio holdings to a maximum of 30 stocks, and they diversify across market capitalisations and sectors, enabling a well-rounded portfolio.
Asset Allocation and Sector Exposure
As of June 2025, the SBI Focused Fund has 88% of its net assets in equities, with banks, auto & ancillaries, and FMCG constituting the top 3 sectors, which make up 40.5% of the portfolio. In contrast, the HDFC Focused Fund has 86.8% of its net assets in equities, with banks, auto & ancillaries, and healthcare as the top 3 sectors, accounting for around 60.1% of the portfolio.
Performance Over Time
Over the past 3 and 5 years, the HDFC Focused Fund has significantly outperformed the SBI Focused Fund in terms of returns and risk-adjusted metrics. Specifically:
- HDFC Focused Fund delivered compounded annualised rolling returns of about 26.3% over 3 years and 27.7% over 5 years. This performance is well above the category average and benchmark (Nifty 500 TRI). The fund has also exhibited lower risk, with a standard deviation (SD) of 10.62%, which is less than the category average and benchmark. Consequently, risk-adjusted returns measured through Sharpe and Sortino ratios are among the best in the category.
- SBI Focused Fund provided lower returns: 14% over 3 years and 20% over 5 years, which are below the category average. Although SBI Focused Fund’s risk (SD around 10.04%) is slightly lower than HDFC’s, its risk-adjusted returns are also muted compared to HDFC Focused Fund.
To summarize in a comparison:
| Metric | HDFC Focused Fund | SBI Focused Fund | |--------------------------|-------------------------|-----------------------| | 3-Year Compounded Return | ~26.3% | ~14% | | 5-Year Compounded Return | ~27.7% | ~20% | | Risk (Standard Deviation)| 10.62% | 10.04% | | Risk-Adjusted Returns | High (best in category) | Moderate (lower than HDFC) |
HDFC Focused Fund’s strategy of a diversified, quality-focused large-cap bias with a buy-and-hold approach underpins its superior performance. SBI Focused Fund, despite having some exposure to debt and cash, has delivered relatively modest returns with somewhat lower risk but not better risk-adjusted returns.
As of 30 June 2025, the top 10 stocks of both the HDFC Focused Fund and the SBI Focused Fund are listed. The HDFC Focused Fund's top 10 stocks comprise 52.3% of the portfolio, including names such as ICICI Bank, HDFC Bank, and Axis Bank. The SBI Focused Fund's top 10 stocks comprise 48.4% and include names such as HDFC Bank, Alphabet Inc., and Bajaj Finserv.
Both HDFC Focused Fund and SBI Focused Fund were launched in September and October 2004, respectively. The HDFC Focused Fund was rechristened as a focused fund in October 2017, and as of June 2025, it manages an AUM of about Rs 209 billion. The SBI Focused Fund, originally SBI Emerging Businesses Fund, was reclassified as a focused fund after mutual fund categorisation and rationalisation norms, and as of June 2025, it has an AUM of about Rs 386 billion.
In conclusion, for both pure returns and risk-adjusted returns over 3 and 5-year horizons, HDFC Focused Fund is the superior choice between the two. However, investors should consider their individual risk profiles and investment objectives before making a decision.
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