While looking at mutual fund investment options, you might think that it is an easier bet to just pick a well performing sector that has delivered double-digit returns. According to data by Value Research, the technology sector delivered an average returns of 19.55% in the last year. However, one year returns may not be enough to place your bets in funds which take a highly concentrated approach towards their portfolio. Are sector funds a one-size fits all category? And how different are they from thematic funds? Here we decode it for you.
What are sector funds
A sector fund is a mutual fund scheme that invests most of its corpus in equities of one particular sector. “Sector funds invest in securities of specific sectors such as information technology, banking and pharma sector as specified in the investment objective of the fund," said Gautam Kalia, head–investment solutions, Sharekhan, an online broking platform.
