1. Essentially, investors in thematic and sector funds take on the role of a fund manager themselves.
2. Only investors with significant large portfolios and high resilience should take on such risks, and allocate not more than 10% of their portfolio in these funds.
3. Moreover, predicting which sector or theme will be tomorrow's winner is very difficult and best left to insiders, as even a contrarian approach may boomerang.
4. If you must invest, ensure that the fund manager who earned high returns in the past should still be at the helm and has a low churn in his top holdings.
5. Unlike diversified equity funds, these funds are not buy-and-hold investments, and investors should plan their exit at the time of buying these funds itself.
6. One sign that a theme or sector might be entering bubble territory is when several fund houses begin to launch a number of funds focused on it.
7. Once that happens, check the valuations at the portfolio level, and exit if they are too high compared to historical levels.
8. Also, if the scheme is too small, chances are the fund house may merge or close it.
9. Normally, banking & financial services gain from GDP growth and positive changes in the macro economy, while a high healthcare inflation is a pointer to the pharma sector's pricing power and profitability.
10. Rate sensitives like auto, housing and capital goods could outperform if interest rates continue to be cut and the economy benefits on its account.
2. Only investors with significant large portfolios and high resilience should take on such risks, and allocate not more than 10% of their portfolio in these funds.
3. Moreover, predicting which sector or theme will be tomorrow's winner is very difficult and best left to insiders, as even a contrarian approach may boomerang.
4. If you must invest, ensure that the fund manager who earned high returns in the past should still be at the helm and has a low churn in his top holdings.
5. Unlike diversified equity funds, these funds are not buy-and-hold investments, and investors should plan their exit at the time of buying these funds itself.
6. One sign that a theme or sector might be entering bubble territory is when several fund houses begin to launch a number of funds focused on it.
7. Once that happens, check the valuations at the portfolio level, and exit if they are too high compared to historical levels.
8. Also, if the scheme is too small, chances are the fund house may merge or close it.
9. Normally, banking & financial services gain from GDP growth and positive changes in the macro economy, while a high healthcare inflation is a pointer to the pharma sector's pricing power and profitability.
10. Rate sensitives like auto, housing and capital goods could outperform if interest rates continue to be cut and the economy benefits on its account.