How is Mutual Fund Diversification by Sector Funds?

[aditya15]

Hello Friends,

I need your advice on mutual fund diversification by sector funds. In last 3 years diversified mutual fund portfolio by sector specific funds such as Fmcg fund (30%), Pharma fund (30%), IT fund (15%), Banking fund (15%) and other sector (10%).

The average annual growth rate of portfolio is around 17 percent. Is this a good investment strategy??

Looking forward your reply.
Thank you.

 

[anand14may]

Hi Aditya,

Diversification among sector funds is a good idea given the fact that you follow SIP route and that too manual SIP. Sharing what I do -

- Have invested in sectors through MF like Banking, Pharma, IT, Auto, Mid-cap.
- I always track sector index and invest a fix sum manually when sector index are down or flat (keep a fix budget in mind or writing so that you don't overshoot your home budget).
- I invest using online MF portal - Fundsindia hence managing purchase is very smooth.
- Since sector funds are cyclical hence would suggest to read the marker and keep tab on gov. policies which might impact sectors like - ease on FDI in retail would give boost to FMCG sector.