| In a never-ending attempt to help you reach | | | | when deciding whether or not to invest in |
| your financial goals, there are more | | | | sector funds, or choosing a specific sector |
| investment opportunities available today than | | | | fund. They can be a difficult investment to |
| ever before. Now, sector funds offer you one | | | | time correctly and they aren't generally |
| more tool in an ever-growing list of | | | | recommended as a short term tool without some |
| financial instruments. | | | | sort of professional assistance. |
| | | | |
| But are sector funds right for your | | | | But which sectors have been doing the best? |
| portfolio? | | | | And which are doing the worst? Well, the |
| | | | answers are fairly obvious. According to |
| Sector funds are a fairly simple concept. | | | | Morningstar, the best sector in the last five |
| They're a collection of stocks in a specific | | | | years is, of course, energy. And what about |
| industry or sector. Whether they are | | | | the worst performing sector in the last five |
| exchange-traded sector-funds or mutual funds, | | | | years? You guessed it, technology. Of |
| sector funds come in a variety of choices. | | | | course, past performance does not guarantee |
| Standard and Poor's splits up the U.S. stock | | | | future returns. |
| market into 10 separate areas. They are: | | | | |
| consumer discretionary, staples, health care, | | | | One important question to ask is: What |
| utilities, industrials, energy, materials, | | | | sectors will do well in the coming months and |
| telecommunications, information technology, | | | | years? And that is where opinions may differ. |
| and financials. | | | | Some experts believe energy will continue to |
| | | | do well, while others point towards emerging |
| Each sector has its advantages and | | | | markets as a sign of future growth. Countries |
| disadvantages, the impact of which will vary | | | | like China, Brazil, India and Russia, are all |
| depending on your personal situation. | | | | starting to benefit from a developing |
| | | | middle-class. |
| Because sector funds are able to focus on | | | | |
| specific investment opportunities, | | | | Others still, believe that the financial |
| accentuated returns both on the upside and | | | | services sector will do well in the |
| downside are possible. This provides yet | | | | near-future. No matter what sector the |
| another example of why diversification across | | | | experts believe will do well, sector funds |
| different asset classes in an attempt to | | | | may offer an added tool to help you achieve |
| reduce overall volatility and risk is so | | | | your financial goals. |
| important. Unfortunately, diversification | | | | |
| does not protect against or prevent losses | | | | Sector funds speak to the investment needs of |
| from occurring in down market cycle. | | | | a very select group of investors and are a |
| | | | unique tool. But different needs and |
| Choosing when to invest is also just as | | | | objectives mean a different style and it's |
| important in sector funds as it is with other | | | | best to consult a financial professional |
| investments. When you choose to enter into a | | | | along the way. With the unique ability of |
| particular sector can make a huge difference | | | | sector funds to focus on a specific industry |
| on how much you gain or lose. Making sure you | | | | or group, they may be an added investment |
| utilize the advice of a financial | | | | tool at your disposal. And in the end, you |
| professional is an important step to take | | | | may just find yourself in the zone. |