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Investing in Sector Mutual Funds!!
Posted: Mon Mar 22, 2010 10:11 pm
by maheshbangalore
I am planning to invest in sector mutual funds such as FMCG, Pharma etc. I understand this is very risky but there are good returns also. Appreciate the ideas and inputs from anybody, who has already invested in specific sector mutual funds..
Thanks,
Investing in Sector Mutual Funds!!
Posted: Mon Mar 22, 2010 11:36 pm
by RRK
If you really know what you are doing, you dont need any advice.
Anyway, since you asked, allocate a small portion for sector funds. Dont make a big bet. This is prudent advice.
Many dont know how to play sector bets. To play it properly, you should not diversify into too many sector funds. If you do, your holdings will look like diversified broad market fund. You will be better off holding an index fund, rather. At lease you will save money in expenses and your portfolio is easier to manage.
When you are making sector bets, you have to remember you are taking specific risk that can be diversified away. And you bet against the market, because you think certain sectors are underpriced compared to the market. To make real money you have to make concentrated sector bets and you have to make really a good call in entry and exit. This is high risk / high return strategy. High risk is guaranteed, high return is not guaranteed. If your entry/exit is great you will beat the market and make loads of money. Remember - dont diversify.
btw, what sectors in India in your opinion is undervalued and what funds you plan to buy to cover that ? Or are you planning to invest in all sector funds ?
Share your investment actions in this thread with us. So, we can monitor your entry/exits closely.
Tons of good luck !
Investing in Sector Mutual Funds!!
Posted: Tue Mar 23, 2010 6:57 pm
by maheshbangalore
Thanks RRK for your reply.
You exactly read my mind. You are very right that not to invest in too many sector funds. It is better to invest in index funds rather than investing in too many sector funds.
As per your suggestion, I am planning to invest very small percentage of my portfolio to sector funds. I am still doing research for sector mutual funds and still testing the waters. Please let me know, what do you think about the following sector funds..
Bank Sector
Religare Banking
Pharma Sector ( Need to select one of them )
Franklin Pharma
Reliance Pharma
FMCG Sector( Need to select one of them )
Magnum FNCG
Franklin FMCG
Technology
DSPBR Technology
Energy
Reliance Diversified Power Sector
I looked at other sectors like Auto, Telecom, Media and Entertainment. I didn't like these sectors as the returns are not good for the last one year.
Thanks,
Investing in Sector Mutual Funds!!
Posted: Tue Mar 23, 2010 8:56 pm
by dbs
maheshbangalore;271771Thanks RRK for your reply.
You exactly read my mind. You I looked at other sectors like Auto, Telecom, Media and Entertainment. I didn't like these sectors as the returns are not good for the last one year.
When investing one has to project to future. Past performance is no guarantee.
Past perfornace comparison is good to discern the capabity of fund manager by comparing the returns of similar funds.
Investing in Sector Mutual Funds!!
Posted: Tue Mar 23, 2010 9:12 pm
by RRK
#3,
1) why do you think these sectors will do well in year 2010 ?
2) Next tell me what is your exit strategy ? When do you plan to exit from these sectors ? What parameters you plan to use ?
Investing in Sector Mutual Funds!!
Posted: Wed Mar 24, 2010 9:24 pm
by maheshbangalore
1) why do you think these sectors will do well in year 2010 ?
I did some research online and selected sectors that looks promising. Also, I looked at various parametes to decide how the sector mutual funds is doing from past one year. I also want to share information from investors, who has currently invested in sector funds.
2) Next tell me what is your exit strategy ? When do you plan to exit from these sectors ? What parameters you plan to use ?
I don't want to be long term investor in sector mutual funds. I carefully do research before selecting any sector fund. I prefer to select sector mutual fund with low beta, which is not very volatile compared to market.
Inspite of lower Beta value, if mutual fund goes below 5%, I will sell it and take the losses.
If the value of the mutual fund increases, let's say above 10-15%, I will wait as long as the value increases. If the value keeps dropping at any point below threshold 5%, I will sell and take the profits.
Please let me know, if there are any better entry/exit strategies.
Investing in Sector Mutual Funds!!
Posted: Fri Apr 30, 2010 4:20 pm
by manmohan
In the MF market While crop funds are increasingly becoming popular among investors, some of the conservative market experts fear a deep credit squeeze or a string of payment defaults could result in loss of investments.i wonder how true that fear is?
Currently fund houses like Templeton, DWS, Reliance Mutual, Religare Mutual and Kotak Mutual Fund have crop funds with varying investment styles and structures.