1. All sectoral funds are seasonal and highly volatile in their returns, require close monitoring, aggressive review, and rebalancing, which can lead to the avoidable habit of "timing the market".
2. You’re also limiting your overall equity exposure, although you're paying full price for it, because all sectoral funds will have to invest 80% min. corpus in stocks of the specified sector, effective Oct'17.
3. That apart, at different points in time, there’s always a need to rebalance - deciding sectors to move out of, and to move in - which is the role of a fund manager, not yours.
4. As sectoral funds are highly volatile, with both top and worst performer likely to be a sectoral fund, investing in them based on past returns can also harm your corpus, and matters get compounded further due to investors' tendency to hold on to laggards, being reluctant to redeem them at a loss.
5. Diversification best suits long-term investment in MFs, and sectoral funds just distract you; and even if you need any extra "growth push" at some risk, it's better to opt for highly rated multicap / midcap / smallcap funds, instead of a sectoral fund, as these would still contain a "diversified basket of stocks" belonging to different sectors.
6. There is, therefore, no need to invest in sectoral funds for long-term wealth creation, as there are no solid reasons why investors need additional exposure to them, with accompanied higher risks.
2. You’re also limiting your overall equity exposure, although you're paying full price for it, because all sectoral funds will have to invest 80% min. corpus in stocks of the specified sector, effective Oct'17.
3. That apart, at different points in time, there’s always a need to rebalance - deciding sectors to move out of, and to move in - which is the role of a fund manager, not yours.
4. As sectoral funds are highly volatile, with both top and worst performer likely to be a sectoral fund, investing in them based on past returns can also harm your corpus, and matters get compounded further due to investors' tendency to hold on to laggards, being reluctant to redeem them at a loss.
5. Diversification best suits long-term investment in MFs, and sectoral funds just distract you; and even if you need any extra "growth push" at some risk, it's better to opt for highly rated multicap / midcap / smallcap funds, instead of a sectoral fund, as these would still contain a "diversified basket of stocks" belonging to different sectors.
6. There is, therefore, no need to invest in sectoral funds for long-term wealth creation, as there are no solid reasons why investors need additional exposure to them, with accompanied higher risks.