Are sector funds risky in the current investment climate? If I do opt for them, which funds should I look at?
Pankaj Jha
Sectoral funds are one of the riskiest funds, and we would not recommend you to go for them unless you already have a well-diversified portfolio. However, what is most important is that you must have the risk appetite to stomach the risks that sectoral funds are fraught with.
As these funds invest their entire corpuses in one or two sectors, their fortunes depend on these sectors alone. For instance, many mutual funds launched technology sector funds in 1999 and 2000, only to burn their fingers––and investors’ money––in the subsequent technology sector bubble burst.
Have an investment horizon of at least three years in a sector fund and be fully aware of how the sector behaves and reacts to overall economy.
This article was originally published on November 25, 2010.
Ask Value Research 
New episodes every Friday 
New Process Alert 
Seems like you've uploaded a wrong QR code. Please upload the QR code downloaded from MF Central platform.
