Though IT and pharma are not really cheap bets, they are good choices at the very moment in the investment market. Investing in decent stocks from these two sectors is more likely to turn out to be fruitful for the investors who have invested with a long-time frame in their mind. Even when the market is fluctuating, investors tend to favour Pharma and IT mutual funds with the hope of earning good returns in the long-run.
The reasons why IT and Pharma mutual funds are favourite in this market
Sector funds like Pharma and IT allow the investors a direct play into the segments which are often too underrepresented in the diversified equity funds. Investing in a particular sector oriented fund can earn huge rewards for those investors who are well-equipped with the knowledge of different sectors
The following pointers highlight why IT and pharma funds are the favourites in this market:
• Tech stocks tend to be the flavour of the season and have enjoyed quite a run at this year’s stock market. Over the span of years, it has been able to outperform most categories of equity funds by a wide margin. The accelerating and steady growth of technology makes the IT sector a long-term trend and a safe bet for the investors with long-terminvestment horizon.
• Though the growth rate of the IT sector is low, the sector has potential risk-reward owing to the basic point that it is a globally sustainable sector that is here for the long-run.
• Even when the pharma sector is not performing great at the moment, in the long run this underperforming sector has the potential to emerge as a good bet. Instead of solely relying upon the IT sector, investors should also invest in a pharma fund in phases that stretch over a few quarters and increase their exposure gradually towards them.
• Investors often grow impatient with their investment when it doesn’t show signs of sharp growth over the night. Before investing in sector funds like IT and pharma, investors need to understand that sector funds are long-term bet which doesn’t earn high returns in short-term. Investors who tend to have a high-risk appetite and have the patience to hold their investment for 5-7 years should bet on these investment sectors.
• Investors can make the most of their investment in the IT and pharma by maintaining a neutral exposure to both the sectors. Going overboard with these sector funds may not be a very wise choice, the only way to ensure fruitful outcomes is by maintaining a balanced approach towards the funds.
Without proper expertise, investors may opt for an unfavourable sector without any cushioning exposure to the other sectors and may face huge losses because of it. Consult our team of financial experts and professional fund managers to avail their assistance on the matters of investment in sector funds like pharma and IT and learn in details about the other crucial information.