What is a Sector Fund

Sector funds are specialized funds which invest only in specific sectors for eg: Energy, Pharmaceutical, Natural Resources etc. They are risky as they are concentrated and offer little diversification.

Usually these funds target emerging sectors which have great growth potential. You see new sector specific funds coming up in the market whenever peers in an emerging sector shows good growth rate and that sector is supposed to have potential growth. They have specific sector indices as their benchmarks like BSE REALTY, BSE BANKEX etc. These funds may earn either great profits or losses. These are not suitable for investors with low risk appetite.

A few example of Sector funds are

Sahara Banking and Financial Services Fund
UTI Thematic Transportation and Logistics Fund
Reliance Pharma Fund

Morningstar (An Investment Research Company) labels sector funds in eight categories:

   1. Technology
   2. Financials
   3. Communications
   4. Utilities
   5. Natural Resources
   6. Healthcare
   7. Real Estate
   8. Precious Metals

However there are funds in other sectors in the market.
 


 
 

Related posts

November 8, 2009 | Filed Under Mutual Funds 

Comments

Leave a Reply





Add to Technorati Favorites