1. In order to differentiate their products from plain vanilla diversified funds or sector funds, fund houses have come up with varied product labels.
2. This is often driven by conviction of their fund managers that superior investment results can be produced by adapting different investment styles and approaches.
3. While investors are generally aware of growth & value labels, as well as cap-based ones, there are a few more labels which we should be aware of.
2. This is often driven by conviction of their fund managers that superior investment results can be produced by adapting different investment styles and approaches.
3. While investors are generally aware of growth & value labels, as well as cap-based ones, there are a few more labels which we should be aware of.
4. "Opportunities" funds:-
a) They primarily invest in stocks or sectors which demonstrate good growth opportunity and are selected on the basis of their capability to capitalize on opportunities that arise from economic changes and reforms, and from those sectors that drive the economy.
b) Usually, these investments are theme- or sector- (or a combination)-specific though they seek to minimize risk arising from pure sector and market-cap based funds.
c) Like growth funds, they are meant for investors looking to generate superior returns with higher risks.
a) They primarily invest in stocks or sectors which demonstrate good growth opportunity and are selected on the basis of their capability to capitalize on opportunities that arise from economic changes and reforms, and from those sectors that drive the economy.
b) Usually, these investments are theme- or sector- (or a combination)-specific though they seek to minimize risk arising from pure sector and market-cap based funds.
c) Like growth funds, they are meant for investors looking to generate superior returns with higher risks.
5. "Contra" funds:-
a) As named, these funds take investment decisions against the general market, for instance, when everybody is bearish, the contrarian fund manager will turn bullish and vice versa.
b) They endeavour to benefit by going against herd mentality, and staying long in such equities, until they turn favourites with higher share price.
c) However, this category is riskier than conventional diversified funds.
a) As named, these funds take investment decisions against the general market, for instance, when everybody is bearish, the contrarian fund manager will turn bullish and vice versa.
b) They endeavour to benefit by going against herd mentality, and staying long in such equities, until they turn favourites with higher share price.
c) However, this category is riskier than conventional diversified funds.
6. "Dividend yield" funds:-
a) They predominantly invest in stocks which have and are expected to have a high dividend yield.
b) Stocks in these funds have a history of paying rich dividends, usually boast sound fundamentals, and are typically among the most consistent performers, even though their earning growth may not be among the highest in the industry.
c) However, the funds' ability to declare dividend will depend on performance of underlying stocks, and not only on their higher dividend payments.
d) As dividends received by them from underlying stocks are added to earnings, naturally, the scheme will do well when dividend yields are reasonably high.
e) In a bearish phase, valuations of many large companies get depressed, which pushes up dividend yield, leading to funds' superior performance too.
f) These funds are expected to safeguard wealth in a falling or bearish market and hence better suited to risk-averse investors.
a) They predominantly invest in stocks which have and are expected to have a high dividend yield.
b) Stocks in these funds have a history of paying rich dividends, usually boast sound fundamentals, and are typically among the most consistent performers, even though their earning growth may not be among the highest in the industry.
c) However, the funds' ability to declare dividend will depend on performance of underlying stocks, and not only on their higher dividend payments.
d) As dividends received by them from underlying stocks are added to earnings, naturally, the scheme will do well when dividend yields are reasonably high.
e) In a bearish phase, valuations of many large companies get depressed, which pushes up dividend yield, leading to funds' superior performance too.
f) These funds are expected to safeguard wealth in a falling or bearish market and hence better suited to risk-averse investors.