Sector Mutual Funds: How to Pick Winning Sector Funds and Avoid Losers
Sam Subramanian PhD, MBA
If you are looking to earn great returns from the stock market sector mutual funds are right up your alley.
Sophisticated investors recognize the potential sector mutual funds offer and know how to make such funds work for them.
You can consistently beat the market by investing in the right sector mutual fund at the right time. In fact, you can make money even in bear markets.
The trick to benefiting from sector mutual funds is to capture the rewards they provide while mitigating the risks they carry.
And, that's precisely what AlphaProfit helps you do ... make money by smartly investing in the right sector mutual fund at the right time.
Select the Right Sector or Industry
Many investors make the mistake of choosing sectors or industries based on a single factor ... trend. Such selection methods are prone to high failure rates.
To help you consistently invest in the right sectors and time entries & exits, AlphaProfit analyzes sectors on both fundamental and technical factors within the context of the business cycle.
AlphaProfit significantly enhances your sector selection success rate by holistically analyzing sectors using a wide range of criteria including valuation, momentum, and news quality.
Pick the Best Sector Mutual Fund in the Selected Sector or Industry
Sector mutual funds come in different colors and flavors. While many sector mutual funds are actively managed, sector index funds and leveraged sector funds are available too.
Some sector mutual funds invest primarily in the U. S. while others scout for opportunities around the globe. Sector mutual funds that limit their investments to specific industries or company sizes in a sector are available as well.
Selecting the right fund in the right sector can go a long way in enhancing returns.
AlphaProfit combines top-down and bottom-up analyses to ascertain the best sector mutual fund within the sector. Analysis of the overall market environment both in the U. S. and across the globe is complemented with analysis of the mutual fund's top holdings, fund management style & consistency, fees & expenses, historical performance, and other factors.
Diversify across Top Sector mutual funds
Snapshot of Diversity in
Sector Mutual Funds
Vanguard REIT Index, VGSIX
Sector index fund investing in real estate companies located in the U. S.
Fidelity Select Energy, FSENX
Actively managed energy sector mutual fund investing in U. S. and foreign companies
Fidelity Select Chemicals, FSCHX
Sector fund investing in the chemical industry within the materials sector
ING International Real Estate, IIRWX
Actively managed real estate fund investing in companies outside the U. S.
FBR Small Cap Financials, FBRUX
Actively managed financial sector mutual fund investing in smaller companies
Matthews Asia Sci and Tech, MATFX
Actively managed technology sector mutual fund investing in companies in Asia
Oil & Gas UltraSector ProFund, ENPIX
Leveraged sector fund investing in Dow Jones US oil & gas index companies
Alpine Emrg Mkts Real Estate, AEMEX
Actively managed real estate fund investing in companies located in emerging markets
Despite the rigor of the evaluation and selection process, there can be instances where investment in a sector mutual fund does not turn out to be exactly as expected. The performance of specific sector mutual funds can at times be affected by exogenous events like the earthquake in Japan or unanticipated industry changes like the ban on drilling in Gulf of Mexico.
To mitigate your risks, AlphaProfit brings together the sector mutual funds from top sectors to construct sector fund-based model portfolios for different investment objectives. AlphaProfit provides weightings for the individual sector funds with a view to minimize portfolio volatility.
Ensure Top Sector Mutual Funds Selections at all Times through Timely Sector Rotation
Mutual funds in different sectors tend to perform better in different stages of the business and interest rate cycles. Consumer discretionary sector funds like Fidelity Select Consumer Discretionary (FSCPX) tend to perform well as interest rates fall and the economy starts to recover from a recession while tech sector mutual funds like Allianz RCM Technology (DGTNX) tend to perform well during expansion phases.
AlphaProfit uses its time-tested sector rotation strategy to ensure sector mutual funds with outstanding return potential are included in the recommendations and model portfolios at all times. By the same token, the sector rotation strategy works to weed out sector mutual funds with inferior return potential in a timely manner.
Beat the Market with Sector Mutual Fund Recommendations and Model Portfolios
AlphaProfit's proven sector mutual fund selection process enables thousands of investors to thrive in turbulent markets.
AlphaProfit provides two market-beating sector fund-based model portfolios you can use in your regular and retirement accounts. Starting out with just a few thousand dollars, you can use the model portfolios to grow your investments to secure your retirement.
The AlphaProfit Focus model portfolio pursues aggressive growth while the AlphaProfit Core model portfolio is tailored for investors seeking long-term capital appreciation.
A dollar invested in the Aggressive Growth (Focus) and Capital Appreciation (Core) model portfolios is worth $42.41 and $20.92, respectively. This implies annualized returns of 20.9% and 16.6%, respectively.
Comparable investments in the Dow Jones Wilshire 5000 and S&P 500 benchmarks are worth $5.45 and $5.28, respectively implying annualized returns of 9.0% and 8.8%, respectively.
Performance of sector mutual fund model portfolios as of September 30, 2013.
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Dow Jones & Company’s Hulbert Financial unit has ranked the AlphaProfit Focus and Core model portfolios #1 rank numerous times.
Here are just a few examples of actual returns earned by AlphaProfit readers from individual sector mutual fund recommendations:
- 94.4% gain from Consumer Services ProFund, CYPIX
- 98.3% gain from Fidelity Select Wireless, FWRLX
- 77.1% gain from Rydex Retailing, RYRIX
Learn 5 Smart Ways of Using Sector mutual funds
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About AlphaProfit MoneyMatters and AlphaProfit
AlphaProfit MoneyMatters is a free e-letter distributed to registered users of AlphaProfit's website. The e-letter analyzes the economy, markets, and sectors and provides money-making insights on stocks, exchange-traded funds, and mutual funds.
AlphaProfit MoneyMatters is edited by Dr. Sam Subramanian acclaimed for his financial acumen and analytical skills.
AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector
Investor's Newsletter, edited by Dr. Sam Subramanian. Leveraging sector funds, the Newsletter provides high-performance model portfolios
with Fidelity funds and exchange-traded funds.
It also includes actionable stock recommendations. This newsletter features among MarketWatch's top 10 investment newsletters and has won
the coveted #1 rank from Hulbert Financial
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