8.29Sectoral funds
1What is it?
Sectoral funds invest at least 80% in one sector, like banking, IT or pharma.
2Why does it exist?
Concentrated bet on one industry: big gains if the sector booms, big losses if it slumps.
3Diagram
| Invests in | Suits | Risk | Suggested horizon |
|---|---|---|---|
| One sector (80%+) | Experienced investors, small allocation | Very high | 5+ years |
4Quick revision
- Sectoral funds invest at least 80% in one sector, like banking, IT or pharma.
- Risk: Very high.
- Horizon: 5+ years.
5Knowledge check
Q1. Minimum in one sector?Show answer
80%.
Q2. Main risk?Show answer
Lack of diversification.
Q3. Example?Show answer
A banking & financial services fund, or a pharma fund.
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