RupeeCase
Education . Sector Funds . 3 of 3
So is a sector fund a mistake
No. It is a satellite. A 5 or 10 pct tilt into a sector your core does not already own is a real position, chosen on purpose. The same fund at 40 pct, stacked on an index that is already a third that sector, is a single point of failure. The size is the whole argument.
01
Check your core first. Look up the top sector weight of your main fund before you buy a themed one. If the theme overlaps your biggest existing slice, you are stacking the bet, not spreading it.
02
A sector fund is one bet. By rule it is at least 80 pct a single sector. Treat it as one concentrated position and size it the way you would size any single bet, small and deliberate.
03
Ignore the twelve month chart. If the only thing making it look good is last year, you are buying the rear view mirror. The sector you can hold through three bad years is the only one worth owning.
A second fund is only diversification if it owns something the first one did not.
General education on portfolio construction, not investment advice. Figures are illustrative and sector weights move over time. No fund, house or stock is named or recommended. Match any decision to your own goals.
Put your funds side by side and see what you actually own
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