THEMATIC FUNDS – PROFITABLE INVESTMENT ALTERNATIVE FOR SMART INVESTORS IN STOCK MARKETS

Abstract

One of the main characteristics of the stock market is its dynamic nature and its consistent variation to factorize all future events affecting the economy and business entities within the country as well as outside the country. Volatility in the stock market is appreciated by aggressive investors who wish to earn high returns in comparison to the other traditional investment alternatives available in the financial market. As high return follows from high risk, one is always advised to exercise all kinds of caution before investing in stocks of the company. But the pace at which returns are generated, sometimes even during a short span, tempts one to forget all do's and don'ts and get carried away with the trend. It is during this euphoric state that one fails to distinguish between good and bad and starts treating all sectors as well as companies equally. However, it has been observed that despite the secular upward trend of a market index, thematic indices may exhibit movement in significantly different directions. The present study has been conducted to examine the movement of thematic indices in comparison to broader market indices and therefore cautions investors against painting all sectors with the same brush during any given period. It also offers a good opportunity for fund managers to allocate their funds to the sectors that are likely to outperform the overall market index and at the same time challenge their ability to forecast sector-wise growth of the entire economy. Keeping in view these facts in the background, this study has been conducted using various statistical tests such as Kolmogorov-Smirnov, Levene Statistic, ANOVA, and Multiple Comparison Post Hoc tests to arrive at a meaningful interpretation.