of late, a lot of investors are showing keen interest in sectoral funds. Sectoral funds are high risk/ return funds and cannot form a base for your portfolio. When a sector is performing well, these funds tend to outperform the diversified funds. It may not be the case in the long run.( esp. in cases like a sector taking a sudden downturn).
The following data may be useful to compare the returns of various sectoral funds with diversified funds.
Traditional Approach to Investing in Equity MF is illustrated in the Pyramid given above. The approach is bottom up ( See Arrow mark direction).
SIP returns - Analysis Two obvious choices in ELSS
What equity funds to invest in?
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