Who should Invest in Sector Funds?
Last Updated : Aug. 23, 2019, 11:55 a.m.
Sector fund is an equity scheme that invests in a particular sector and not in various sectors simultaneously. Schemes investing in infrastructure sector can only invest in infrastructure and not jump into technology. That is why every fund is named after the sector they are investing in, like, ICICI Pru Banking and Financial Services Fund or SBI Technology Opportunities Fund.
Investing in a particular sector deprives the sector mutual funds from diversification. No diversification means high risk. There is no investment to back you up during market lows like it is in the case with multi cap funds. If, during a bearish market, the mid & low cap stocks underperform in a multi cap scheme, large cap stocks are there to save the day. This does not happen in a sector fund thereby increasing the risk.
As sector funds are a high risk instrument, It is not recommended for lay investors to invest in sector funds. Institutional investors, who have a high risk appetite and want aggressive returns, should get involved. Or, investors, who have a special knowledge about a particular sector and are intuitive about their growth in the near future, should definitely invest in sector funds. Also, employees with ESOPs (Employee Stock Option Schemes) can sell it, and invest the money in sector funds. With this move, employees will be able to invest in a variety of stocks from the same sector rather than just be invested in the stocks of one company.
Recommended Sector Funds to Invest In!
| Sector | Fund Name | 1 Year Return | 3 Year Return | 5 Year Return | Riskometer | Rating |
|---|---|---|---|---|---|---|
| Infrastructure | Franklin Build India Fund | -10.23% | 4.65% | 9.88% | High | 5 star |
| Banking | ICICI Pru Banking and Financial Services Fund | -8.28% | 9.73% | 13.61% | High | 5 star |
| Technology | SBI Technology Opportunities Fund | 4.03% | 12.85% | 10.07% | High | Unrated |
Note: All the data that has been mentioned in this articleis sourced from Value Research as on Aug 23, 2019. Return data mentioned is in regards to Regular Plan.
How to Invest in Sector Funds Online?
If you wish to invest in Sector Mutual Funds , you can do so through Wishfin, a financial marketplace, where you can choose the best sector funds for you and rule out the ones that doesn’t seem a great fit by comparing. To invest, all you have to do is follow the below mentioned steps:
- Log on to www.wishfin.com
- Go to ‘Mutual Funds’
- Click on on ‘Login/Register
If you are a new investor who is keen on investing, you need to follow the below mentioned registration process.
Registration Steps:
- Mention your mobile number
- Click on ‘Next’
- Enter the One-time Password (OTP) received on your mobile number
- Click on ‘Verify and Continue’
- Mention full name, email, city
- Create a password that must have the required number of alphabets, numeric and special characters
- Click on ‘Sign Up’
- Mention a few more details before the registration can be made successfully
Login Steps
- Mention your email or mobile number
- Click on ‘Get OTP’ to receive the same
- Enter OTP at the prescribed space
- Click on ‘Login’
- Go to ‘Explore Mutual Funds’
- Go to ‘Equity’ and then on to ‘Sector Funds’
- Click on ‘Invest’ below any of the sector funds shown above
Disclaimer: Mutual Fund Investments are subject to market risks, read all scheme related documents carefully before investing.