Money In Your Pocket Minute: Sector Funds
Last Update: 10/22 10:30 am
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If you’ve never heard about investing into sector funds, here is a crash course:
An increasingly popular way to invest is to use sector mutual funds. What they do is invest in a specific sector, so that means areas like technology or commodity funds. Rick Reagan says he is “in to” commodity funds right now.
One of the advantages of sector funds over ETFs is that they are actively managed. They are picking the underlying commodities that they think are going to do best. So while they are concentrated in an area, you do get diversity across stocks. They’ll typically own 40 or more stocks in a given area.
If you pick the right sector you can really maximize your returns. One example is the technology sector that has done really well this year. Another great example since the market bottom March 9, is financial sector funs on average are up 100%.
While this strategy can increase returns, it can also increase risk if you pick the wrong sectors.
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