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Sectoral Fund Investments

Investments in sectoral funds should be in small quantities. Also have an exit plan in place for them…

Should I consider investing in UTI MNC or UTI Transportation & Logistics for a 5-year time horizon?
-Ramesh Chandra

Like many investors, you seem to be driven by past performance. While the recent performance of both of these funds has been impressive and inspiring, it is exactly the reason why one shouldn’t be investing in them. Chasing past performance can be a mistake because you never know when the fund would turnaround. UTI MNC, which is heavily into pharma and FMCG, has done well over the past 3-4 years when the overall markets have been turbulent. Similarly, UTI Transportation & Logistics, which was erstwhile UTI Auto, has also impressed. However, despite these performances, we believe that it is undesirable for an investor to have such concentration in their portfolio. Investments in such sectoral funds should be in very small quantities, and you should have an exit plan in place as well to redeem the funds once your target is achieved.

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