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Thematic Mutual Fund Schemes

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Introduction

Thematic mutual funds are a type of equity mutual funds that invest in a specific theme.

So, if the theme performs, the returns will excellent.

However, if the theme does not perform well, the returns will be subdued.

Some examples of thematic funds are those that invest in PSU companies, companies that focus on rural consumption etc.

Investing in this type of schemes requires some understanding about the theme, in particular about the trends of the companies that fall under the theme and timing the market moments as well.

Hence, we need to be very perfect in entering and exiting the theme at the right time so as to get the best of returns.

If you follow the markets thoroughly, have conviction on the performance of the theme, have a clear strategy about entry and exit, then these scheme might be suitable for you.

Otherwise, Diversified Equity Funds are better.

Sundaram Rural India Fund

The primary investment objective of the scheme is to generate consistent long-term returns by investing predominantly in equity/equity-related instruments of "Companies that are focussing on Rural India".

Off late, our Union Budget (particularly 2016 and 2017) have greater focus on Rural India.

So, this scheme might perform well.

However, keep in mind of the need to enter and exit from the scheme at the right time to get the most of the returns.

Switching out of UTI Infrastructure Fund

I want to switch from my less performing UTI infrastructure fund to another. Which is a good one please advise Vijay sir...

As the name is saying, it is a sectoral / thematic fund. It will perform only when the underlying theme works out.

My view is that such schemes are for experienced investors who have skills to time the market.

I am not aware of good schemes from UTI MF per se because all of them always give subdued returns. I suggest you to redeem the funds and go for a good multicap fund such as, say, BSL Equity Fund of ICICI Prudential Value Discovery Fund.

If you still want to stay hooked with UTI for some reason, switch the units from gradually from UTI infrastructure fund to UTI Midcap fund.

  • Date: 4 April 2017

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