Mahindra Manulife Focused Fund tops category with 20.3% 5Y CAGR; how SBI, HDFC peers compare

Focused mutual funds are steadily gaining popularity among investors seeking concentrated yet diversified equity exposure. With assets under management (AUM) of about ₹1.72 trillion as of January 2026, the category has delivered competitive returns in recent years. These funds follow a strategy of maintaining a compact portfolio of up to 30 stocks, as mandated by market regulator SEBI, allowing fund managers to take meaningful positions in high-conviction ideas. 

Within this segment, Mahindra Manulife Focused Fund has emerged as one of the standout performers, delivering strong returns and demonstrating consistent benchmark outperformance across multiple time frames.

Strong returns across time frames

On a point-to-point basis, the Mahindra Manulife Focused Fund has outperformed its benchmark, the Nifty 500 TRI, over the one-year, three-year, and five-year periods, with outperformance ranging between 1 and 6 percentage points depending on the time frame. 

Over the five-year period ending February 20, 2026, the fund delivered a compound annual growth rate (CAGR) of 20.3%, placing it among the top performers in the focused fund category. During this period, it also surpassed returns generated by several well-known peer funds such as SBI Focused Fund, Invesco Focused Fund, Kotak Focused Fund and Franklin India Focused Fund. 

The fund’s systematic investment performance has also been notable. Over the past five years, a monthly SIP in the Mahindra Manulife Focused Fund generated an XIRR of 18.4%, significantly higher than the 13.4% XIRR delivered by an SIP in the Nifty 500 TRI over the same period. 

Consistent rolling return performance

The scheme has also demonstrated consistency in rolling return analysis. When three-year rolling returns from November 2020 to February 2026 are considered, the fund outperformed the Nifty 500 TRI 100% of the time.

Moreover, during this period, the fund delivered returns above 15% in every rolling three-year instance, highlighting the consistency of its performance across market cycles. The average three-year rolling return stood at 26.5%, significantly higher than the 17.5% average recorded by the Nifty 500 TRI benchmark. 

Portfolio strategy and sector allocation

The Mahindra Manulife Focused Fund typically maintains a large-cap bias, which helps moderate risk while maintaining stability in the portfolio. Historically, over 80% of the portfolio has been allocated to large-cap stocks, and as of January 2026, the allocation has increased to more than 92%. 

At the same time, the fund retains flexibility to increase exposure to mid-cap and small-cap stocks when broader market opportunities improve, enabling it to capture additional upside potential.

From a sector perspective, financial services have consistently been the largest allocation, often accounting for over one-third of the portfolio. This exposure has proved beneficial during the past 16–18 months, when financial stocks have been among the better-performing segments of the market. 

Other key exposures in the portfolio include oil & gas, consumable fuels, commodities, power, and PSU banks, reflecting the fund’s tactical overweight stance on select “old economy” sectors.

Outlook for focused funds

India’s macroeconomic environment remains supportive, with the country continuing to be among the fastest-growing major economies globally. Low inflation, supportive interest rates and improving corporate earnings are expected to sustain equity market momentum. In such an environment, focused funds with concentrated portfolios and active stock selection may continue to generate strong returns for investors.

Peer watch

HDFC Focused Fund

HDFC Focused Fund – Regular Plan is a concentrated equity fund that aims to generate long-term capital appreciation by investing in a limited portfolio of high-conviction stocks. The strategy allows the fund to hold up to 30 stocks, enabling focused exposure to companies with strong growth prospects. 

As of March 2026, the fund maintains a high equity allocation of about 90.15%, while 7.9% is held in cash and cash equivalents, ensuring liquidity. The portfolio is tilted toward large companies, with an average market capitalisation of ₹2.76 lakh crore, indicating a preference for established market leaders. 
Sector allocation is dominated by financials (44.47%), followed by consumer discretionary (20.75%), technology (8.4%), and healthcare (6.82%). Key holdings include HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, and State Bank of India. The fund has delivered strong performance during bullish cycles, posting 29.58% returns in 2023 and 23.76% in 2024, reflecting its ability to capture market upswings.

SBI Focused Fund

SBI Focused Fund is an equity scheme that follows a concentrated investment strategy, holding a portfolio of up to 30 stocks to generate long-term capital appreciation. As of March 2026, the fund manages assets of about ₹42,998 crore and maintains a strong equity orientation. 

In terms of asset allocation, equities account for 88.62% of the portfolio, while 10.46% is held in cash and cash equivalents and about 0.92% in debt instruments, providing some liquidity and flexibility for market opportunities. The portfolio consists of 24 stocks with an average market capitalisation of ₹3.63 lakh crore, indicating a bias toward large, established companies. 

Sector allocation is led by financials (30.72%), followed by technology (18.85%), consumer discretionary (13.22%), and energy & utilities (8.97%). 

Key holdings include Alphabet Inc., Muthoot Finance, HDFC Bank, State Bank of India and Bharti Airtel. 

Performance-wise, the fund delivered 22.22% returns in 2023 and 17.16% in 2024, reflecting its ability to capture market upcycles while maintaining relatively controlled volatility.