While the global markets are currently going through a bout of volatility on account of surging inflation, the Indian markets have managed to be unaffected to a certain extent and has been fairly steady. As the world awaits the Fed’s decision to rein in US’ inflation, all eyes are on the stock markets and how they will absorb the shock that is to follow.
Many market experts and veterans are pointing this out, and are identifying a trend here. Similarly, during different market cycles, there always turns out to be a particular group of stocks, usually clubbed into a sector that turns out to do well, sometimes even when the market displays an overall negative sentiment. These stocks tend to do well in the long run too, based on the overall situation and economic development in the country.
What are thematic investments?
Or for instance, if India’s policies focus on a push to the tertiary or the services sector, then services would become a theme, and stocks in the banking, insurance, IT, etc will become thematic names.
Who is thematic investing for?
While everyone can opt for thematic investment, it is usually advised to have better market understanding before diving into this method of investing. Since this method is partly based on speculation, one must be careful before investing money through this method. For fledgling investors, Srivastava recommended the large-cap space as a good point to begin their journey.
The Pros and the Cons of Thematic Funds
Srivastava said that while on one hand thematic funds can give an investor exposure to different cos as well as different markets, on the other, they carry higher risk than other funds.
While investing in thematic funds may seem like a prudent investment strategy, it is always advisable to read and research a particular company/sector, and to consult a financial expert before you invest your money.