Why entry and exit matter in sector funds?
Jun 21, 03:06

Sector funds, as the name suggests, give investors exposure to companies operating within a particular sector. For example, there are technology funds, banking funds, pharma funds, commodities funds, etc. But these funds are not suitable for every investor. When these sectors do well these funds can potentially outperform, but when sectors go through a down cycle, such funds can make heavy dent in your investments. This is why it is important to get both entry and exit right in sector funds. If you enter at the peak of the sector's business cycle it can be detrimental to your investments. A sudden change in sector's dynamics can wipe out your profits, so delaying exit is also risky.

Tough call (2)