WHAT ARE SECTORAL FUNDS?
Funds that invest in stocks from a single sector or related sectors are called Sectoral funds. Examples of such funds are IT Funds, Pharma Funds, Infrastructure Funds, etc. Regulations do not permit funds to invest over 10% of their Net Asset Value in a single company. This is to ensure that schemes are diversified enough and investors are not subjected to undue risk. This regulation is relaxed for sectoral funds and index funds. There are many other types of schemes available in our country, and there are still many products and variants that have yet to enter our markets. While it is beyond the scope of this curriculum to discuss all types in detail, there is one emerging type of scheme, namely Exchange Traded Funds or ETFs, which is discussed in detail in the next section.