February 23, 2024
Table of Content
1. How Does an Opportunities Fund Work?
2. Who Is It Ideal For?
An opportunities fund invests in companies, sectors or investment themes depending on where the fund manager anticipates growth opportunities.
Opportunities funds scout for themes in the debt market. The objective is to maximize gains for investors. Opportunities funds are offered by unit-linked insurance plans / ULIPs, mutual funds and other investment firms.
Fund managers look for opportunities in all corners of the market. In a way, that is what they are expected to do.
The opportunities could be in areas like:
- Large companies also called large caps, due to their huge market capitalization or market caps
- Mid-sized companies or mid caps
- Smaller companies or small caps
On the same lines, the fund manager could scout for opportunities in sectors or industries like:
- pharmaceuticals
- engineering
- technology
- automobiles
- power / utilities
- oil and gas
- banking and financial services
There are investment themes involving many sectors that pose an opportunity. The fund manager targets some of these themes to maximize gains for investors. For instance, he may pick one or more themes like these to maximize the fund's performance:
- infrastructure
- exports
- economic revival
- rural growth
- new economy
Opportunities are not restricted to equity markets. There are growth areas in debt markets as well that the fund manager can target if his investment mandate calls for him to do so.
Some opportunities in the debt markets include:
- long-term bonds
- short-term bonds
- government securities / gsecs
An opportunities fund looks to maximize growth by investing in areas defined by its investment mandate. The investment guidelines vary across ULIPs / mutual funds and investors are informed of this through product literature / company websites.
Who Is It Ideal For?
For an investor with appetite for risk and long-term goals like saving for child's education, retirement planning or child's marriage, diversified equity funds can prove useful either on a standalone basis or in combination with other investment options.
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