Sectoral Funds? Good bet or a bad one?

POSTED BY Ravi ON June 2, 2013 11:15 am COMMENTS (5)

I was just checking the returns provided by Sectoral funds (FMCG and Pharma) and found that these have always given positive (> 10 %) returns in the last 5 years, 3 years and 2 years. More so their returns were also higher than equity – diversified, mid and small cap etc.

Just wondering why no one suggests to invest in them? Any thoughts?

 

5 replies on this article “Sectoral Funds? Good bet or a bad one?”

  1. Ravi says:

    Thanks Sumit and Ashal for your responses.

  2. Dear Ravi, I do hope from your own home work for Infra funds & the reply given by dear Sumit, you can decide what to do for your own portfolio?

    Thanks

    Ashal

  3. Sumit says:

    Hi Ravi,

    You can invest in sector funds, but before that understand the risk involved in it as the return depends only on a particular sector. So one has to be well informed about the factors that impact the sector and willing to track closely their performance.
    That’s why experts advise significant portion of investment in diversified funds, and then in a sector fund if the portfolio is lacking weight-age of any specific sector.
    But obviously FMCG , Pharma sectors outperforming other sectors for last few years, and also expected to continue so. So no one will stop you from investing in well performing sector funds, you can use it opportunistically. But I will not put more than 5-10% (of my equity investment part) in sector funds, if I were you.

  4. Ravi says:

    Dear Ashal,

    I had checked Infra funds also and yes their returns are really dismal. My apologies if I was not clear earlier, I was just asking about FMCG and Pharma sector funds. They seem to have done really well.

  5. Dear Ravi, please read past discussions here. Just to add a bit for your home work on sectoral funds, please check the status of infra funds.

    Thanks

    Ashal

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