Chasing Sectoral Fund Winners Often Backfires: Nilesh D Naik Warns Investors
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Chasing Sectoral Fund Winners Often Backfires: Nilesh D Naik Warns Investors
M
Moneycontrol•02-03-2026, 16:47
Chasing Sectoral Fund Winners Often Backfires: Nilesh D Naik Warns Investors
•Nilesh D Naik states that chasing sectoral fund winners often leads to disappointing outcomes, citing historical examples like the tech crash and infrastructure fund losses.
•Despite high volatility, sectoral and thematic funds constitute 43% of Indian equity schemes and attract over 3 crore folios, indicating strong investor interest.
•Recency bias, where investors prioritize recent performance over long-term trends, is a key factor driving investment in volatile sectoral funds.
•Analysis shows investors shifting to best-performing sectors based on past returns earned significantly lower subsequent returns compared to broader market indices.
•Sectoral funds are suitable for experienced investors with high risk tolerance and the ability to assess sector fundamentals, not just past performance.
