What are Sectoral PMS Strategies?
Sectoral PMS strategies concentrate their portfolio in 1–2 sectors where the fund manager has deep domain expertise. They are designed to capture structural growth in specific industries like technology, healthcare, or BFSI. Due to concentration, they carry higher volatility but potential for superior returns when the sector performs.
- Domain Alpha: Fund managers with 15–20 years in target sector
- Concentrated Bets: 8–20 stocks for maximum sector impact
- Sector Rotation: Some managers rotate between sectors based on macro signals
- Suitable as Satellite: Best used as 20–30% of total portfolio alongside core
- High Beta: Sector funds outperform significantly during sector tailwinds
Using Sectoral PMS in Your Portfolio
Sectoral PMS works best as a tactical satellite allocation:
- Core (60–70%): Diversified multi-cap or large-cap PMS for stability
- Satellite (30–40%): One or two sectoral PMS for alpha generation
- Review annually: Sector thesis must remain intact for continued holding
- Size appropriately: No single sector PMS > 15–20% of total portfolio
- Rebalance: Trim winners; add to laggards when fundamentals intact