Your investment in a sectoral fund should only be a miniscule portion of your overall portfolio and only to fill a void of that sector...
09-Jul-2013 •Research Desk
I want to Invest in ICICI FMCG Growth fund for short term of one year. Will it be a good investment?
Why do you want to invest in a FMCG 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 in positive territory.
We advise investors to invest in diversified funds, because they serve the purpose of investing in mutual funds. The main reason for investing in funds is to get the services of an investment manager who does the research and makes the choices for you. If you have to bother yourself with which sector is doing better, then what’s the point of a mutual fund?
Concentrated funds are not suited for most individual investors. You get the full advantage of mutual funds by investing in diversified schemes. And most diversified funds will give you adequate exposure to sectors like FMCG that are doing well. So you don't even miss out on anything. Sector funds do very well or very poorly, which is why they're volatile investment vehicles.