Thematic Funds – The Undiversified!

By Rahul Pithadia: When you think of mutual fund schemes, you think diversification. But did you know there are two types of schemes which are not so big on diversification, but take a more focused approach?

Thematic funds fall in this space.

Thematic funds could have themes ranging from Multi-Sector, International / Multi – Economy, Commodity, particular style of investing etc.

Canara Robeco Infrastructure Fund-Growth Daily chart:

Canara Robeco Infrastructure Fund 20151221

This Scheme invests in equities and equity related instruments of companies in the infrastructure sector. Out of the total Equity investment around 40% is into Engineering & Capital goods and Cement & Construction.

Portfolio Analysis: Canara Robeco Infrastructure Fund is a thematic fund which is designed to invest in shares of those companies, which hold high potential to benefit from such infrastructure Index.

Risk Profile: Being a thematic scheme there is no diversification and dependency is only on a particular sector. This makes the fund highly risk because some sectors may perform well while the others might face the bad times.

Returns 20151221

When is the right time to enter? So now from investment perspective a down move towards 30-35 levels is plausible in this fund. The reason behind it is that Infra sector has corrected post making a high in July 2015 and it is continuously exhibiting lower high lower lows with no sign of relief as of now so it is advisable to avoid fresh investments in this fund from medium term perspective but it can be clubbed with other equity funds for better diversification and risk reduction.

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