From the time i started reading about Mutual Funds. I have been told not to invest in sector fund. The main reason being all my money in only one sector and any bad news in that will bring down my entire value in it.
I just wanted to dig in existing sector based funds and their performance in long term.See below the top ranked fund by Value Research in each sector and their return from inception
Sector Fund Name Years Return %
- Banking Reliance Banking Retail 7 years 37.24
- FMCG ICICI Prudential FMCG 10 years 22.07
- Pharma Franklin Pharma 10 years 20.61
- IT DSPBR Technology.com Reg 10 years 16.15
I see all of the funds have performed well in a long run. So why should i avoid putting in some part of my investment in one of sector like say ‘banking’. This after 10-15 years is not going to be non existent sector. From the history(which we use for equity diversifed fund) this sould also provided a 12-15% return on a long run. I dont understand why people dont recommend the sector based fund for long term.
Am i Missing something,which is the reason for no recommendation from other people?enlighten me please.