Consider the following statements about ‘Sector Funds’:
- Sector funds are an Open-ended mutual funds
- Sector funds carry higher risk than equity mutual funds.
Which of the above statements is/are correct?
Sector funds are those mutual funds which invest solely in businesses that operate in a particular industry or sector of the economy. First statement is incorrect because sector funds are closed-end funds; and since they are closed ended funds, they have lack of diversification associated with them, and are more risky than diversified equity mutual funds.
This question is a part of GKToday's Integrated IAS General Studies Module