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Should I invest in thematic funds?

Dhirendra Kumar says how are sector and thematic funds different from other funds and if they are worth investing in

How are thematic funds different from sector funds? Is it advisable to invest in thematic fund?
- Ashish, Gurugram

Transcript: Sector funds are well defined around specific sectors - banking, pharma or IT. Thematic funds try to capitalise on an opportunity. For instance a fund like Sundaram Rural India Fund which focuses on the opportunity in rural India. Don't get excited by thematic and sector funds. When they turn out to be right they generate extraordinary returns but on most occasions, when they don't, they turn out to be disasters. Remain diversified at all times even at the cost of missing out on some opportunities. The idea of mutual fund investing is that you don't want to speculate. Most investors can do without thematic and sector funds. If you feel excited about a theme or a sector and feel that it is not reasonably represented in your diversified fund, consider investing a small part of your corpus in it.

How important is the role of a fund manager?
He is the most important person. When you are buying insurance or a stock from a broker, the person involved is important but the delivery there is highly structured and defined. With fund managers, here is a person who is entrusted with managing your money. We worry when a person managing a fund for a long time, changes. So the fund manager is all important.

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