Arijit Sharma is not a new mutual fund (MF) investor, but, 2016 made him feel that he is a newbie. His top investment holdings in funds with large exposure to IT and pharma companies dragged down overall performance. In contrast, his office colleague Sandeep bet big on funds private sector banking stocks exposure and made lots of profit.
If you share a similar tale like Sharma, you are not alone. Funds with one or two big-hitters, like in a cricket team, need to get it right every time. If the star batsman is out, they lose the plot. In contrast, diversified equity funds have a low risk profile that is suited for investors who don't want to take concentrated bets. Experts say that MF investors must know the pros and cons of both types of investment styles, and then decide.
