In the Durga Puja season in Kolkata, ‘themes’ separate winners from relative stragglers in the frenetic race for eyeballs and footfalls. In Mumbai, too, they do virtually the same job, albeit in a more prosaic field – of making money.
Theme-based or sectoral investing is the in thing these days in Mumbai, with equity indices scaling new peaks.
Wealth managers believe mature investors are ready for ‘concentrated bets’ to generate alpha from their portfolios instead of seeking the shield of ‘diversity’ for downside protection.
“Investors are playing the cyclical uptick through thematic funds in a risk-adjusted manner,” said Nirav Karkera, head-research, Fisdom. “Many wealth managers are weaving stories around sectoral themes to attract investor attention.”
Investors must examine their own portfolio before allocating funds to a theme so that there is no overlap with the existing portfolio.
For example, an investor with an existing large-cap exposure that has a 30-40% concentration in private banking stocks would gain little by buying into another banking fund with the same stocks constituting a bulk of the portfolio.