Chasing trends always seems quite exciting, but what most people tend to be unaware of is the pitfalls of such behavior. An American novelist and poet Jack Kerohouac sums this up well when he says “Great things are not accomplished by those who yield to trends and fads and popular opinion”.
When it comes to investing, experts often advise long-term investors to avoid chasing trends as it can potentially derail their financial plan. However, the investor behavior we have been witnessing in the recent past is quite the opposite. In the first three months of financial year 2024-25, approx 33% or one third of the overall gross inflows in equity mutual funds have gone into thematic and sectoral funds. Needless to say, a large chunk of this money has gone into funds which invest in the “hot” sectors and themes. In other words, investors seem to be chasing the trends. Now the important question is: Is this a healthy phenomenon in a country where mutual funds penetration is still extremely low and a large proportion of current mutual fund investors have just started investing in the past few years?
