Sector fund is a fund that could be exchange-traded or closed-end fund that invests on a business of a particular industry or sector. It concentrates on the investment in the single sector in the market.
Advantage of investing into the Sector Fund
1. Sector funds are less diversified; they carry a significant level of volatility and risk.
2. Sector funds can be actively managed.
3. It restricts their investments to a particular segment.
Sector Fund future Performance
1. Sector funds could go on to cash during the sell signals, drawdown are kept to extreme minimums.
2. Sector funds will reduce the exposure to any single industry by being affected by negative news.
3. Past performance is not an indication of the future performance.
Sample of Sector funds where you can invest
1. SBI Magnum Sector Funds Umbrella
2. Fidelity Sector Funds
Quote of the day:
The sector funds could increase the price if there is an increased demand for the product or service offering that is provided by the businesses in which the funds invest. But there could also be heavy losses in this type of fund, in which when there is downturn in the specific sector in which the sector fund invest.
Best Reading:
- What is No-load fund
- What is Exchange-traded fund
- What is Value fund
- What is Regional Mutual fund
- What is Index funds
Conclusion:
The sector funds do not fall on particular categories. Sector fund could be a good way in diversifying the portfolio. Hope you read more of our mutual funds and have a happy reading.
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