We do not recommend investing in sector funds because the stock markets always favour some sector more than others and the favourites keep rotating
08-Oct-2015 •Research Desk
I wish to invest in a dedicated pharma fund. Is it a wise idea? My investment horizon is four to five years.
- Gaurav Pathak
We do not recommend investing in sector funds. Over any period of time, the stock markets always favour some sector of the economy more than the others. Therefore some set of sector-specific funds are always doing better than the others. Over the last many years, the favoured sector has rotated from one to another. Also, funds manager of a sector mutual fund is forced to invest in the same sector even when the sector is not performing well. This will adversely impact the overall returns from your portfolio. Choose a diversified fund based on your risk tolerance and investment horizon. Invest in equity funds only if you have an investment horizon of at least five years.