Summary: Value Research’s long-standing ‘avoid new and sectoral funds’ advice left existing holders with nowhere to turn. This piece explains the shift: instead of a blanket ban, Fund Advisor now gives a provisional, proportion-based opinion on such funds you already hold, without treating it as a final rating.
Summary: Value Research’s long-standing ‘avoid new and sectoral funds’ advice left existing holders with nowhere to turn. This piece explains the shift: instead of a blanket ban, Fund Advisor now gives a provisional, proportion-based opinion on such funds you already hold, without treating it as a final rating.
For many years, we’ve asked investors to avoid two kinds of mutual funds. One: funds that are too new and haven’t built up a track record to judge properly. A fund needs about three years before its record means anything because, at the start, it’s often relatively small and operating in the kind of market the AMC chose. By the time three years pass, it has had to face at least some adversity. Therefore, our limit has been three years, both for our star ratings and for subjective judgements.
Two, thematic or sectoral funds. My view has always been that part of the judgement that building a portfolio requires is how much to invest in which sector. An approach that puts the onus of this judgement on you is not doing its job. Therefore, the only type of equity fund that should get your money is diversified funds.
So, my advice stands. The practical problem is that this advice is for someone just starting to invest, and at this poin