How to manage your portfolio?
Sector Diversification is not for Retail Investor
Retail investors get misguided by reading fund manager interviews or journalists write ups in newspaper.
We were stunned when one of our subscribers asked us, are you overweight or underweight IT? Direct equity investors are often wrongly advised by investment management community to diversify into 8-10 sectors just because Index consists of so many sectors.
We should first start by answering why Index was formed. Index was formed for Pension fund/insurance companies to gauge how a particular fund manager performs in comparison to broader market. The Index consists of mostly large sectors/companies of the economy depending on how developed the country is.
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