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Elara Note Points To Exuberant Sentiment In Thematic And Sectoral Funds, 2019 1. 2.

The Rise of Thematic and Sectoral Funds

Thematic and sectoral funds have experienced a surge in popularity in recent years, with investors flocking to these types of funds in search of high returns and diversification. These funds focus on specific themes or sectors, such as technology, healthcare, or renewable energy, and invest in companies that align with these themes. • Key characteristics of thematic and sectoral funds include:

  • A focus on specific themes or sectors
  • Concentrated buying of select stocks
  • Investment in companies that align with the fund’s theme or sector
  • A potential for high returns, but also high risk

    • The Concerns of Elara Capital

    Elara Capital has expressed concerns about the current market conditions, comparing them to periods ahead of the dot com crash and the global financial crisis of 2008-09. The report highlights the concentrated buying of select stocks by thematic and sectoral funds, which has led to inflated valuations across sectors. The report notes that this concentrated buying has resulted in a lack of diversification among these funds, making them more vulnerable to market downturns.

    The Impact of the Global Financial Crisis on Thematic and Sectoral Schemes

    The Global Financial Crisis (GFC) had a profound impact on thematic and sectoral schemes, leading to a significant decline in inflows.

    However, with the introduction of the new scheme, the closure of schemes is now visible from the 1st of January of every year. ##

    The New Scheme: A Breakthrough in Transparency

    The new scheme introduced a significant change in the way schemes are closed.

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