Are diversified equity funds investing too much in the tech sector?
Memories of the year 2000 flood back. Late 1999 and January 2002 saw the tech sector boom. The funds were ecstatic about the tech sector. Some funds invested up to 51% of their total investments in tech stocks — extremely high and dangerous for a diversified equity fund. Everyone soon realised this sector is as susceptible to ups and downs as any other. And when the sector crashed in February 2000, diversified equity funds burnt their fingers (along with those of their investors). Let’s see the situation today. Once bitten, twice shy! Granted. In the last five years, fund managers of diversified equity funds have not been able to manage without tech stocks. The reason is obvious — this sector has grown phenomenally in the last decade and has great promise of growing more. Should you be wary? No. While the love for tech stocks has not diminished, it is worth notingwhat has changed in the last five years is the percentage of money invested in such stocks by fund managers. From the begi
