Motilal Oswal Private Wealth on Thursday said the sector funds are not for beginners or investors looking to build a nest egg during busy and systematic investment plans (SIPs).
In this episode of ‘Mutual Fund Corner’, Ashish Shanker, Managing Director and CEO, Motilal Oswal Private Wealth; Sector funds are best for sophisticated investors who basically understand sectors, investors who have time to do research or investors or clients who work with advisors to analyze the data and then suggest sector funds to their clients.
Talking about critical risks, Shanker said these funds tend to be more volatile than their diversified counterparts.
“Also, the strategy of exiting such funds is critical because a trading cycle goes through stages. Therefore, one must time the entry and time the exit. Failure to correctly time the exit call can lead to the loss of significant profits,” he said. .
See the attached video for more