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Always Diversify with Mutual Funds

The FMCG sector won't do as well as some other sectors in the current bull run. Diversify your investments

I have recently invested ₹50,000 in SBI FMCG fund. Is this a good investment?
-Satish

Investing a lump sum amount in any mutual fund is a bad idea, more so if it's a sectoral fund like SBI FMCG. The reason to invest in mutual funds is to get the benefit of diversification. Over the past few years, the FMCG sector was doing well despite the poor economic conditions and dismal show of other sectors. However, given the current optimism in the markets, this sector won't do as well as the others in a bull run. Hence, you would do well to diversify your investments and invest systematically to avoid catching a market peak.

This article was originally published on May 26, 2014.

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