1. There is no need to keep sector funds for long-term wealth creation as there are no solid reasons why investors need additional exposure to them.
2. They are seasonal in their returns, but require a close monitoring and aggressive review, leading to the avoidable habit of "timing the market".
3. Diversification is the name of the game for long-term mutual fund investment, and anything more is just distracting you.
4. Even when you want to provide a "growth push" to your long-term portfolio, it would be better to add a consistent highly rated mid/small-cap fund, instead of a sector fund, as it would still contain a "diversified basket of stocks" belonging to different sectors.
5. When you entrust your money to a fund manager, you tell him to manage your money and decide which sectors or companies to invest in.
6. If you invest in sector funds yourself, you’re basically limiting your exposure and paying full price for it.
7. That apart, at different points in time, things are not equal and there’s always a need to rebalance, decide which sectors to move out of, which to move in, which is the role of a fund manager.
8. Hence, it doesn’t make sense for you to do that by yourself by investing in sectoral funds.
9. It is always better to invest in well-performing, diversified equity funds for long-term wealth creation.
10. Even long-term statistics support this fact if you compare 10-year CAGR returns of top performing funds of various sectors like infra, technology, banking, pharma, FMCG and international funds with those of diversified ELSS, Balanced, multi-cap, large-cap, mid-cap and small-cap funds.
2. They are seasonal in their returns, but require a close monitoring and aggressive review, leading to the avoidable habit of "timing the market".
3. Diversification is the name of the game for long-term mutual fund investment, and anything more is just distracting you.
4. Even when you want to provide a "growth push" to your long-term portfolio, it would be better to add a consistent highly rated mid/small-cap fund, instead of a sector fund, as it would still contain a "diversified basket of stocks" belonging to different sectors.
5. When you entrust your money to a fund manager, you tell him to manage your money and decide which sectors or companies to invest in.
6. If you invest in sector funds yourself, you’re basically limiting your exposure and paying full price for it.
7. That apart, at different points in time, things are not equal and there’s always a need to rebalance, decide which sectors to move out of, which to move in, which is the role of a fund manager.
8. Hence, it doesn’t make sense for you to do that by yourself by investing in sectoral funds.
9. It is always better to invest in well-performing, diversified equity funds for long-term wealth creation.
10. Even long-term statistics support this fact if you compare 10-year CAGR returns of top performing funds of various sectors like infra, technology, banking, pharma, FMCG and international funds with those of diversified ELSS, Balanced, multi-cap, large-cap, mid-cap and small-cap funds.