Ask Value Research

Choose Diversification over Sectors

A thematic or sectoral fund shouldn’t be the used for regular equity investments. Switch to diverse funds instead…

I started an SIP of Rs 1,500 in Reliance Diversified Power Sector fund in April 2010. Should I continue this investment or switch?
-Faisal Khan

Reliance Diversified Power Sector fund is not a great vehicle for regular investments. This fund was very popular when it was launched because many investors got carried away by the word ‘diversified’ in its name. However, it’s not a diversified fund; it’s a power sector fund. Any thematic or sectoral fund shouldn’t be the vehicle used for regular equity investments, unless it’s a very small part of your overall portfolio. We would suggest you stop investing in this fund and switch to more diverse ones.

This article was originally published on June 01, 2012.

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