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Sectoral Fund Rationale

Your investments in sectoral funds like a pharma fund should be only a small portion of your portfolio…

I want to invest in a pharma fund; please advice. I also wish to know the fund that I can invest in for my one-year-old child’s future.
-Saurav Das

Why do you want to invest in a pharma fund? Do you feel that your current equity portfolio lacks exposure to this sector? Are you very bullish on the prospects of this sector? Whatever be your reason, your investment in a sector fund must form a very miniscule portion of your overall portfolio and only to fill a void or because you are very optimistic on the fortunes of that sector. Also, do note that sectors are very volatile on their own. There will be years of over-performance and then a sudden slump. Currently they are doing well and their one-year return is actually in positive territory unlike most equity funds.

As for investing for your child’s needs you need not stick to one fund. Select two good funds from the ‘Equity: Large & Mid Cap’ and ‘Equity: Multi Cap’ category. Pick any 5-star rated fund from those categories on our website. Make sure to review the performance of the funds that you invest in at least once a year to evaluate its progress and to make any changes if necessary.

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