What are sector-specific funds/schemes?

Such mutual fund schemes invest in the securities of only a specific sector or industry, as specified in the offer documents, e.g., Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks, Information Technology (IT), Banks, etc. The returns in these funds are dependent on the performance of the respective sectors/industries. While these funds may give higher returns, they are riskier compared with diversified funds, investors need to keep a watch on the performance of those sectors/industries and must exit at an appropriate time.

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