1

I have data from Indian Mutual funds from 2006-2016 that indicates that one would be significantly better off investing in a bunch of sector funds over index funds/a bunch of index funds. Is there any prior research/theory about it?

3

A sector fund is just that, a fund that doesn't own the broad market, but a slice of one sector, say utilities, semiconductors, or consumer staples, etc.

If the index you follow is available as 10 sectors that would comprise the whole index, buying all 10 sector funds would be silly, they literally add up to that larger index.

If you are convinced that some funds will outperform or some will underperform (same thing when you think about it) you can buy the better ones. With no other data, I'd say that the claim that one can be significantly better off long term is a bit exaggerated. Sectors appear to rotate depending on the part of the economic cycle you're in.

  • Just to point out specific Indian context, in last decade or so, Real Estate / Infrastructure / Power / Communications / Aviation have lost value. Some to the extent of 90%. i.e. if one were invested with 100, the value today is 10. In last few years, they have shown improvement, so the 10 has become 20 or 30. So if you compare recent years, it would show 200% growth. – Dheer Apr 24 '17 at 3:54

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.