Shriram Mutual Fund has launched a multi-sector rotation fund to diversify from the traditional sector-based investment strategies. The fund is designed to capitalise on sectoral cycles, during rising trends and avoid stagnation.
Deepak Ramaraju, senior fund manager at Shriram Mutual Fund, said other asset management companies are likely to follow suit with such a product.
Many investors join sectors when they're performing well, often due to FOMO, but then face difficulties when these sectors decline. We wanted to create a solution to help investors avoid such traps by rotating across sectors.Deepak Ramaraju, Senior Fund Manager at Sriram Mutual Fund
Avoiding 'Sector Traps'
The idea of the fund is to help investors avoid “sector traps”, where they invest in sectors just before they start to decline. “If you entered IT at its peak and didn't exit at the right time, you could have seen your returns diminish," Ramaraju said.
By rotating out of sectors as they begin to stagnate and moving into those positioned for growth, Shriram Mutual Fund aims to capture upward trends, he said.
Ramaraju further mentioned that over the past decade, thematic and sectoral investments have grown nearly 20-fold, reflecting investors' growing interest in these areas.
Three Major Benefits
Ramaraju mentioned three major benefits the new fund offers to investors: diversified sector exposure, proactive rotation to manage risks, and tax efficiency.
The fund will maintain an optimal mix of three to six sectors, reducing risk exposure to any single sector. The fund will rebalance monthly to reflect shifts in sectoral momentum. To identify sectors, Shriram Mutual Fund has employed a combination of top-down and bottom-up analysis, using both quantitative and fundamental assessments.
The fund will open for subscriptions on Dec. 18 and is structured as an open-ended scheme, providing liquidity without lock-in periods.
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