What happens if all investment companies pile in?

Powerful_Pierre

I may be asking a silly question but if many investment companies all pile into the same sector - for example India, would this have the effect of artifically inflating prices? I note Jupiter have now launched an India fund.

wombat42_2

Powerful_Pierre wrote: »

I may be asking a silly question but if many investment companies all pile into the same sector - for example India, would this have the effect of artifically inflating prices? I note Jupiter have now launched an India fund.

Why should they pile into the same sector ? Anyway the amount of money in UK unit trusts is hardly going to inflate the share prices of a whole country.

China. for example, has had stellar rises in the last few years but there are still only a few funds. Same for India. These sorts of places need specialist knowledge so not any tom !!!!!! or harry can set up this sort of fund. Similarly there are only a handful of natural resources funds.

Powerful_Pierre

Thanks wombat and please forgive my ignorance but.. Each of the funds in each specialist sector will only have a limited number of companies that they consider to be worth investing in - say a mining company. If the handful of natural resources funds wanted to buy into the same mining company then would this not drive the price up or am I missing something? Do fund managers speak to each other or are they fierce rivals?