Sectoral funds are Equity Mutual Funds that focus on businesses operating within a specific industry, like technology, healthcare, energy, or financial services or any other sectors. They invest at least 80% of the funds in stocks from that sector, offering potential returns when the sector performs well. However, this investment approach comes with higher risk due to sector concentration.
Characteristics of Sectoral Funds
Sectoral funds concentrate on specific sectors, which means they mainly invest in companies within those sectors. This concentration can result in higher returns when the chosen sectors perform well. However, it also brings a higher risk if those sectors underperform. As a result, the returns from these funds can be unpredictable and may fluctuate depending on the performance of the selected sectors.
Advantages of Sectoral Mutual Funds
1. Diversification within one
