Here’s an often asked question: How are the ‘opportunity’ category funds different from the rest of the diversified pack? They don’t have a defined investment approach as compared to diversified funds. Depending on the outlook, a fund manager can take any stock, sector, cash and other portfolio-related calls without any restrictions. This may result into quicker portfolio churning, thus leading to a higher level of cost and risk. Thus, opportunity funds provide greater flexibility to the fund manager. Such an approach can result in higher returns, albeit with greater risk factors attached. Such funds also have better potential to outperform the diversified fund category when the markets are buoyant. But during market falls they experience a more painful plummet....
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