BQ Big Decisions: Should You Include A Sectoral Or Thematic Fund In Your Portfolio?
BloombergQuint’s Big Decisions podcast gets you the insights you need to make big money decisions with confidence.
If you were to study the composition of the Nifty 50 Index over the past two decades, you would witness a few interesting trends.
First, infrastructure companies that were dominant in the first few years of the century fell out of favour. Second, banking and financial companies gained ground and as of September this year, accounted for about a third of the index.
The change in the Nifty's composition is testament to the fact that businesses go through cycles. Investors who read these cycles early enough are able to take advantage of them.
For those investors who have the conviction that a sector or a theme is going to be dominant in the coming years, but unsure which companies to invest in, an option is to buy either a sectoral or thematic fund. But because such funds focus on a narrow slice of the market, there are inherent risks in investing in them.
On this BQ Big Decisions podcast, BloombergQuint spoke with Swarup Mohanty, chief executive officer of Mirae Asset Investment Managers, to understand the difference between sectoral and thematic funds, and what strategy investors should employ when investing in them.