Fund houses offer thematic funds for niche investment options. While a favourable market can offer substantial returns, these funds carry significant risks. Investors should tread with caution and limit their exposure to around 10% of their equity-fund portfolio.
In a bull market, investors often seek opportunities to outperform by focusing on specific sectors or themes that are currently in favour. This demand is amplified by the perception that these targeted investments can offer higher returns compared to more broadly diversified funds. Asset management companies capitalise on this interest by launching new thematic and sectoral funds, which allows them to offer niche investment options.
