1. Sectoral funds are seasonal in their returns, requiring a close monitoring and aggressive review, which leads to the avoidable habit of "timing the market".
2. Diversification best suits long-term mutual fund investment, and sectoral funds just distract you.
3. 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.
4. When you entrust your money to a fund manager, you tell him to manage your money and let him decide which sectors or companies to invest in.
5. If you invest in sector funds yourself, you’re basically limiting your own market exposure and still paying full price for it.
6. 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, not yours.
7. As sectoral funds are highly volatile, with both the top and worst performer likely to be a sector fund, investing in them based on past returns can also harm your corpus, with matters get compounded further due to investors' tendency to hold on to a losing position because they are reluctant to redeem them at a loss.
8. It is always better to invest in well-performing, diversified equity funds for long-term wealth creation, and even statistics support this fact.
9. There is, therefore, no need to invest in sector funds for long-term wealth creation, as there are no solid reasons why investors need additional exposure to them, with accompanied higher risks.
2. Diversification best suits long-term mutual fund investment, and sectoral funds just distract you.
3. 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.
4. When you entrust your money to a fund manager, you tell him to manage your money and let him decide which sectors or companies to invest in.
5. If you invest in sector funds yourself, you’re basically limiting your own market exposure and still paying full price for it.
6. 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, not yours.
7. As sectoral funds are highly volatile, with both the top and worst performer likely to be a sector fund, investing in them based on past returns can also harm your corpus, with matters get compounded further due to investors' tendency to hold on to a losing position because they are reluctant to redeem them at a loss.
8. It is always better to invest in well-performing, diversified equity funds for long-term wealth creation, and even statistics support this fact.
9. There is, therefore, no need to invest in sector funds for long-term wealth creation, as there are no solid reasons why investors need additional exposure to them, with accompanied higher risks.