Hi Dev, Greetings ! I have invested in HDFC Banking & Financial Services Fund lumpsum in NFO and presently going SIP @2000/- per month. Your suggestion Please. Best, cgopal
Ans: Sectoral funds, also known as sector-specific funds, are equity mutual funds that invest at least 80% of their net assets in companies operating within a specific industry or sector of the economy. Examples include banking, technology, healthcare, or infrastructure.
Lumpsum investment in NFO: Since NFO is New Fund Offer so you avail the initial NAV (Net Asset Value) of the fund, which could be beneficial if the NAV increases later. Being a new fund, it doesn't have a track record to assess its performance. The banking sector can be volatile, so you need to be prepared for potential fluctuations in the fund's value. It's important to monitor the fund's performance and periodically re-evaluate your investment based on its track record.
SIP of Rs. 2000/- per month: As Sectoral funds focus on a specific sector or industry, such as technology, commodity, banking & finance, healthcare, or energy and thereby contains the concentration risk and is very cyclical in nature and it is difficult to predict which sector will perform and how long.
Considering the risk to reward ratio, we suggest you to discontinue the investments in this fund.