What is the primary focus of sector mutual funds?

"Investing in a diverse range of asset classes like equity, debt, and real estate" "Investing in companies within a specific sector of the economy" "Providing guaranteed returns regardless of market fluctuations" "Primarily investing in fixed-income securities like bonds"

Which of the following is a potential drawback of investing in sector mutual funds?

"They offer high diversification, reducing risk" "They are generally less expensive than other types of mutual funds" "They can be highly volatile due to their focus on a single sector" "They are not subject to market risks, ensuring stable returns"

What is a key advantage of investing in sector mutual funds?

"They guarantee protection against inflation" "They offer low returns but are considered extremely safe" "They provide exposure to a specific sector's growth potential" "They are suitable for investors with a low-risk tolerance"

How do sector funds achieve diversification within their portfolio?

"By investing in multiple asset classes like stocks, bonds, and real estate" "By holding a variety of stocks from companies operating in different sectors" "By investing in companies of varying market capitalizations within the chosen sector" "By spreading investments across different geographical regions and currencies"

What type of investor might consider sector mutual funds a suitable investment option?

"Investors seeking low-risk, fixed-income investments" "Investors looking for guaranteed returns with minimal volatility" "Investors with a high risk tolerance and a belief in a specific sector's potential" "Investors primarily interested in short-term trading strategies"