While global markets are currently going through a period of volatility due to rising inflation, Indian markets have been able to remain somewhat unaffected and have remained fairly stable. As the world awaits the Fed’s decision to rein in US inflation, all eyes are on stock markets and how they will absorb the shock that follows.
Many market experts and veterans point this out and recognize a trend here. Similarly, during various market cycles it turns out that there is always a particular group of stocks that are usually assigned to a sector that is performing well, sometimes even when the market as a whole is showing negative sentiment. These stocks also tend to perform well over the long term based on the country’s overall situation and economic development.
What are thematic investments?
Or, for example, if India’s policy focuses on a push into the tertiary or service sector, then services would become a theme and stocks in banking, insurance, IT, etc. would become thematic names.
Who is thematic investing suitable for?
While anyone can choose to invest in thematic investing, it is usually advisable to have a better understanding of the market before delving into this investment method. Since this method is partly based on speculation, one must be cautious before investing any money through this method. For young investors, Srivastava recommended the large-cap space as a good starting point for their journey.
The pros and cons of thematic funds
Srivastava said that while thematic funds can give an investor exposure to different cos and different markets, they also carry a higher level of 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 specific company/sector and consult a financial expert before investing your money.