I want to start four SIPs in sectoral funds. I want to choose sectoral funds because I believe the top sectoral funds have 20 per cent weightage in the financial sector. I need you to advise me on this. What are the funds I should go for?
-Nageshwar
We think this is a bad idea. Investing in sectoral funds is like getting half the service after paying the full price. When you entrust your money to a fund manager, you tell him to manage your money and decide which sectors or companies to invest in. if you invest in 4 sector funds yourself, you're basically limiting your exposure and paying full price for it. That apart, at different points in time things are not equal. There’s always a need to rebalance, decide which sectors to move out of, which to move into, which is the role of a fund manager. Hence, it doesn’t make sense for you to do that by yourself by investing in sectoral funds. We would suggest you to invest in 1 or 2 well-performing, diversified equity funds.
This article was originally published on April 17, 2012.
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