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Focus funds are the new buzzwords

as launches from groups such as Gartmore, ABN, Merrills, Lazards and now R&SA testify.

They are a reaction against the craze in benchmark funds that have come to dominate much of the industry.

It was the trackers&#39 success that caused many funds to hug closely to their benchmarks. But many have failed to add value, giving extra ammunition to the index brigade.

Focus funds will be highly concentrated with 30 to 40 stocks and not benchmark-oriented. If they don&#39t like Vodafone, they won&#39t own it. This truly active approach is what many investors expect. The majority of investors are looking for absolute return while the whole fund industry is hooked on relative performance.

However, focus funds are not plain sailing either. They have been around for years, often under the guise of special situations. One of the bestknown focus funds must be Schroder UK Enterprise.

It is therefore very important these concentrated funds have a clear investment process that can be articulated and explained, is flexible, adaptable and allow the individual manager&#39s flair to shine through.

One such fund I believe will succeed is the RSA Prime equity fund under the stewardship of Michael Felton. The fund manager and group has put research, time and resource into it. But I wish all these funds every success. We need our active champions. I take no pleasure in reporting failure.

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