Nippon India Focused Equity Fund: Outstanding track record of wealth creation

Nippon India Focused Equity Fund has given 65% return in the last one year (as on 19^th July 2021); it has been one of the best performing focused equity funds. The scheme underperformed in 2018 and 2019, but has come back strongly in the last 2 years. The long term track record of the scheme is also very impressive. Rs 1 lakh invested in the fund 10 years back (20^th July 2011) would have grown to over Rs 4.40 lakhs (as on 19^th July 2021); see the chart below.

Source: Advisorkhoj Research

About Nippon India Focused Equity Fund

Nippon India Focused Equity Fund was launched in December 2006 and has Rs 5,282 Crores of assets under management (AUM). The expense ratio of the scheme is 1.92%. Vinay Sharma and Prateek Poddar are the fund managers of this scheme. As per SEBI’s mandate, focused equity funds can invest in maximum 30 stocks. Though concentration risk is higher in these funds compared to more diversified funds, investment experts think that reasonable diversification can be achieved with 25 to 30 stocks. Further higher concentration in high conviction stocks can enable focused equity funds to deliver higher alphas. Nevertheless, since concentration risk is higher, you need to have high risk appetites for focused equity fund.

Performance Consistency

We have discussed a number of times in our blog that rolling returns is one of the best measures of performance consistency over long investment tenures. The chart below shows the 3 year rolling returns of Nippon India Focused Equity Fundversus its benchmark index S&P BSE 500 TRI since the scheme inception. You can see that the scheme outperformed the benchmark most of the times over 3 year investment tenures across different market conditions since inception.

Source: Advisorkhoj Rolling Returns

Let us now compare the 5 year rolling returns of this scheme versus the benchmark since inception. A longer investment horizon is more suitable for focused equity funds because it can enable the fund manager to reap maximum gains through long term buy and hold strategy in high conviction stocks. Please see the chart below. You can see that the performance of the scheme is much more consistent over longer investment tenures. It has almost always beaten its benchmark and created alphas over long investment tenures.

Source: Advisorkhoj Rolling Returns

The median annualized 5 year rolling returns of Nippon India Focused Equity Fund since its inception (till 19^th July 2021) was around 16.4%, while the average 5 year rolling returns was 14.7%. Please note that Nippon India Focused Equity Fund was launched nearly 15 years back and therefore, when we are calculating average 3 year rolling returns we have quite a large sample of rolling returns across different market conditions including the Global Financial Crisis of 2008, Eurozone debt crisis, US China Trade War and COVID-19 pandemic.

Nippon Focused Equity Fund gave more than 12% returns over 5 year investment tenures, nearly 63% of the times since its inception and negative only 1% of the times. The risk reward trade-off of this scheme over 5 year plus investment tenure is quite favourable for investors.

Wealth creation by Nippon India Focused Equity Fund

The chart below shows the wealth accumulated through Rs 10,000 monthly SIP in Nippon India Focused Equity Fund, Growth Option over the last 10 years(period ending 30^th June 2021). You can see that with a cumulative investment of Rs 12 lakhs you could have accumulated wealth of more than Rs 31 lakhs over the last 10 years through monthly SIP. The annualized SIP returns (XIRR) over the last 10 years was 17.85%.

Source: Advisorkhoj Research

Who should invest?

• Investors looking for long term capital appreciation


• Investors with high to very high risk appetites


• Investors with minimum 5 year investment tenures


• You can invest in this scheme through Systematic Investment Plans


• If you have lump sum funds but are worried about volatility, then you can invest in this scheme through 3 – 6 months Systematic Transfer Plan (STP).


• You should consult with your financial advisor if Nippon India Focused Equity Fund is suitable for your investment needs.

Note: Returns compared/ shown above are for Regular plan Growth option