Avoid sector, thematic funds; stick to diversified equity offerings

Among sector/thematic funds, technology funds are on average down 23.4 per cent year-to-date

Many retail investors, who are experiencing their first bear market, are shocked at the erosion in the value of their mutual fund (MF) portfolios. The pain is especially acute for those who had taken excessive exposure to sector/thematic and small-cap funds. Even international diversification has failed to stanch the bleed in this downturn.

Steep fall in sector/thematic funds

Among sector/thematic funds, technology (tech) funds are on average down 23.4 per cent year-to-date (YTD), while health care funds are down 15.7 per cent.

Each sector/theme follows its own cycle. Periods of outstanding performance are followed by deep slumps. To make money,