Sectoral delusions

As you would have seen, this issue's cover story is about sectoral and thematic funds. Our regular readers know quite well that we have always been deeply sceptical about sectoral funds. In Value Research's publications as well as in other media, I have always said without equivocation that there is no case for an investor investing in any such fund. The rationale has always been quite clear to me. At any point, some sector or the other is doing better than the markets in general. That's in the nature of the markets. The equity market, on the whole, is the average of all its components. Obviously, some parts will be better than average, and some will be worse. Consequently, a diversified portfolio never looks like the best bet at any point in time. It's a mathematical certainty that some sectors will always have better short-term performance tha